Preamble

The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Ministry of Health Provisional Order Confirmation (Bacup) Bill [Lords],

Ministry of Health Provisional Order Confirmation (North Lindsey Water Board) Bill [Lords],

Ministry of Health Provisional Order Confirmation (Wembley) Bill [Lords],

Read the Third time, and passed, without Amendment.

CIVIL ESTIMATES (SUPPLE MENTARY ESTIMATES, 1939).

Estimate presented,—of a further sum required to be voted for the service of the year ending 31st March, 1940 [by Command]; referred to the Committee of Supply, and to be printed. [No. 159.]

MACCLESFIELD CORPORATION BILL [LORDS].

Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).

Bill, as amended, and Report to lie upon the Table; Report to be printed.

Orders of the Day — OVERSEAS TRADE GUARANTEES BILL.

Ordered for Second Reading read.

11.6 a.m.

Mr. R. S. Hudson (Secretary, Overseas Trade Department): I beg to move, "That the Bill be now read a Second time."
The House will recollect that as recently as February last we passed an Export Guarantees Act which increased from £50,000,000 to £75,000,000 the limit within which the Department might at any time assume liability on guarantees. The effect of that was to treble the figure which was originally laid down when the system of export guarantees was first introduced, and it was a measure of the increasing use that was being made of these facilities by the export trade of this country, and a measure of the intention of the Government to continue every effort to help our export trade. The present Bill does not make any alteration in that part of the original Act.
The House will remember, also, that it was a condition of the grant by the Export Credits Guarantee Department of facilities under that legislation that each individual transaction should be subject to the advice of an independent advisory committee of business men, whose function it was to assess the risk on purely commercial grounds. It will also be within the recollection of the House that experience has shown that there were certain cases where, although in the opinion of business men the risk on purely commercial grounds was one that might not be advisable, nevertheless it might on grounds of national interest be desirable that it should be taken. The Export Guarantees Act provided for a continuance of the procedure of advice by the advisory committee as far as the £75,000,000 was concerned, but made provision for a new and more elastic procedure, to be used as and when necessary, and it is that part of the original Act which we are altering to-day. When we brought in that Measure in the early part of this year, we had in mind certain quite limited objectives, and, although right hon. and hon. Members of the House suggested that the limit of

£10,000,000 was unduly low, we did not feel justified, in the circumstances of the time, in asking that such essentially novel and experimental powers should be granted to us in excess of the limit which we then thought was necessary.
The Act received the Royal Assent on 28th February. Within a very few weeks there occurred changes in the political situation as a result of which we have drawn much closer to a number of foreign countries and have assumed new and onerous obligations; and in view of these circumstances, we found it necessary to consider whether steps should not be taken to increase and strengthen the commercial and economic relations between ourselves and many other friendly nations. But if our closer political association with certain Powers is to provide a contribution to the maintenance of peace, and it is our intention and hope that it may, it is clearly necessary that those countries should be as prosperous and as strong as possible.
With the assumption of our new obligations we felt bound to consider whether there were any further steps that we could usefully and properly take, consistently with the maintenance of our own strength, to strengthen those countries by providing facilities which would enable them to obtain on credit supplies which our own industry could provide but for which, owing to the shortage of exchange, those countries were unable to pay on a cash basis, for the purpose of strengthening their own defences and their own economic position. The lines on which we have been pursuing this question are known to all quarters of the House. My right hon. Friend the President of the Board of Trade signed an agreement with Rumania this week involving a guarantee of about £5,500,000 for the purchase of United Kingdom goods for defence and other purposes and I signed a similar agreement with the Greek Government involving a guarantee of £2,000,000.

Mr. Benson: Is that in addition to the sum of £5,000,000 referred to in the protocol?

Mr. Hudson: It has been increased by £500,000 in order to enable the Rumanians to purchase a considerable quantity of yarn from Lancashire the full provision for which was not anticipated in the original protocol.
Equally, we are discussing with Mr. Nash at the present moment the question of granting credits in respect of exports to New Zealand under Section 4. They will probably be used partly to enable the New Zealand Government to finance purchases in this country for their defence programme, and partly for the purchase of commercial requirements for the New Zealand Government as distinct from private importers. In addition to these amounts it will be remembered that in the course of my recent tour I discussed with the Polish authorities during my visit to Warsaw the question of effecting an increase in trade and binding more closely together the economic relations between Poland and this country, and also the problems with which they were faced in developing their industrial capacity. As the House probably knows, negotiations are being carried on at this moment with the Polish Mission in London under the leadership of Colonel Koc. These negotiations are actually in progress, and I am afraid I cannot disclose any particulars of them to the House.
It is to meet these and other possible commitments that we are coming forward with the present Bill, the primary object of which is to increase the figure of £10,000,000 under Section 4 of the Export Guarantees Act to £60,000,000. The House and the country may well feel that this is a very considerable increase, and all the more so when we realise that, whereas the £10,000,000 under Section 4 of the Export Guarantees Act included interest, this present figure of £60,000,000 is exclusive of interest, so that, if interest were included, the figure would be substantially greater. But, great as the figure is, if we had had to introduce a Bill to meet all the requests that have been put forward to us in the course of the last few weeks or months the sum would have been many times larger. I merely put in that caveat to show that we have not fixed the figure of £60,000,000 on any arbitrary basis; it has been reached after full consideration of the various requests that have been presented to us, and we think it represents a considered balance between the desirability of meeting in full the various claims made upon us and the additional calls on our available resources arising out of our own defence requirements.
To individual applicants for assistance whom we have had to refuse, or where at all events we have had to refuse the full amount of their requests, it may perhaps seem a matter for wonder, when they see the total figure of £60,000,000, that we have not been able to allocate a little more for their own purposes; but I hope that, if any one of those countries entertains such a feeling, what I have just said will have served to absolve us from any doubt as to our sincerity, and to assure them that we have gone to the utmost limit compatible with doing justice to the various vital calls which are being made at the present time on our general economy. I have already referred to the distinction which was drawn in the Export Guarantees Act between the two sorts of guarantees. Now that we are proposing to the House to increase the limit under Section 4 of the Act, we have thought it desirable to draw the distinction more clearly between the two functions; and we are, therefore, altering the title, calling this the Overseas Trade Guarantees Bill, and at the same time repealing Section 4 of the Export Guarantees Act.
Part II of the Bill introduces a new principle. It is really the only fundamental change that the Bill makes. At present, the Government may assist foreign Governments by guaranteeing bills or securities, which are then put on the open market, and out of the proceeds the manufacturers in this country are paid for their exports. As long as the amounts were comparatively modest, no great difficulty was anticipated, but one or two instances have occurred recently which have made us fear that if these bills are placed on the market as soon as they are drawn, the occasions may be inauspicious, and there may be a difficulty in disposing of them. We, therefore, propose to take powers to enable the Board of Trade to purchase the securities with moneys advanced by the Treasury, and either to hold the securities or dispose of them when a suitable opportunity occurs. I hope that the House will find that explanation satisfactory, and give a Second Reading to the Bill.

Mr. Pethick-Lawrence: This Bill is being discussed on Friday morning in a somewhat thin House. Members of the House will appreciate the reason for that,


but it would be a very great mistake to imagine that what we are doing to-day is of second-rate importance. The passage of this Bill will be one of the most important milestones which have been passed in these very important days. We are proposing to take a step of a character which has not been taken, certainly since the Great War, and possibly since the Napoleonic wars of over 100 years ago. The right hon. Gentleman has expounded, with the courtesy and accuracy which Members of the House know to be his characteristics, the details of this Measure: he has even spoken in a few broad general words of the larger facts with which it is concerned; but he has said very little to enlighten Members of the House, and still less the general public outside, as to the background which lies behind these proposals. That background consists of a canvas on which, not merely the affairs of these islands or the British Empire, but the affairs of the whole world and its interests are painted.
On the technical side of the Bill there is not very much to add to what the right hon. Gentleman has himself told us. Its prime object is to increase the amount of overseas trade guarantees in that section which is not a commercial proposition. The right hon. Gentleman and the Government have now come to the view that it is better to divide these non-commercial guarantees entirely off from those which are of a commercial character and which were joined with the present guarantees previously in a single Act. It will be remembered that in that Act the limit of guarantee was up to £10,000,000 for this particular type of credit. That included not only capital, but interest. This Bill has as its first and prime object to increase the limit to £60,000,000. That is an increase, apparently, of £50,000,000; but, in fact, the increase is far greater than is represented by that difference, for, whereas the £10,000,000 was inclusive, the £60,000,000 is exclusive of interest. In the original idea of export credits the period of repayment was a matter of only a few years, but the period of repayment under this Bill may be much more than was contemplated before. Therefore, this matter of interest is of considerable concern, and the increase represents far more than £50,000,000. I should hesitate to put into figures how much it may actually be.
The second considerable change is that the promissory notes of government, which are the direct form in which the foreign government faces the obligation, instead of being put immediately on the market, may be held for a considerable time, and during that time the British Exchequer, under Clause 4 of the Bill, has to come forward and find whatever money may be necessary. Therefore, what is really happening in this Bill is that, at any rate to a partial extent, it is the British investor, by means of a loan, who is in the first instance actually paying for the goods which are to be manufactured in this country and sent abroad.
These are, broadly, the main technical changes which this Bill proposes, and I propose now to examine the very important results that flow from those two things, firstly, on the financial side, and then in their international aspect. Stripped of all financial jargon, it really means that money is to be found in this country, at any rate for the moment, to pay for some part, and perhaps a considerable part, of this rearmament of foreign countries. Yesterday in this House the Chancellor of the Exchequer explained that the borrowing which would be necessary in order to meet the requirements of our own armaments and our own Civil Defence, which he had estimated at some £380,000,000 when he made his Budget Speech only three months ago, had now very considerably increased, and he put into precise figures, what I had already suggested, that the £400,000,000 figure was long passed, and that the total to be borrowed on that account would approach close on £500,000,000 in this single financial year.
The House ought to realise that what is happening, if we carry this Bill, is that the sum already announced as nearly £500,000,000 will be increased by a considerable additional amount on account of these credits. The right hon. Gentleman himself has not said anything to indicate how far the British lender will have to put his hand into his pocket to find the money at all, or how much will be required in this financial year. Quite naturally and properly the right hon. Gentleman could not possibly have told us that, but that it will be considerable no one can possibly doubt. If it were that anything like the whole £50,000,000 additional envisaged in this Bill were to be spent during the current


financial year, and if the credit were to be in fact largely British, then you would have to add to the figure given to the House yesterday by the Chancellor of the Exchequer of close upon £500,000,000, a further £50,000,000 and bring it up to something like £550,000,000. Perhaps that is putting it too high. It may be that not the whole of this amount will be required in the current year. I do not know. It may be that the credit of the Government on whose behalf these proposals are being made in some cases will be so good that it does not make any large inroad into the financial position of this country at the present time. He would be a bold man who would say, but it almost certainly represents an increase of half that figure, which is £25,000,000, and it may be much, more. That is a very grave fact—It is a fact of which the country or even this House is by no means fully seized up to the present moment.
But even this financial fact pales into insignificance when we come to see the wide canvas on which these events are painted. It is quite clear that whether it be our own Empire—and the right hon. Gentleman mentioned that part of this money was to be used for New Zealand, and very rightly so—or whether it is foreign countries, we are really spending at the moment British money in order to arm other parts of the world. It has been said across the Channel that it is typically British to get others to do our fighting for us. That is grossly untrue. No one who knows what is being done in this country with regard to our own man-power can possibly suggest that the men and women of this country are not getting ready to take, if necessary—and we all hope and pray that the necessity will never arise—in their own spheres, their share in defending this country. But it is true that in order to make the peace front as wide and as effective as possible, we are proposing in this Bill to see that other nations, who with us are forming the peace front, shall not be unable to make the necessary resistance because they are lacking in finances which will enable them to have the arms that they require for defence.
How has this necessity arisen? In view of this very important decision which we are reaching to-day; it is not out of place to look back along the road which we have

travelled, to see some of the milestones that we have passed. By the bravery of our British troops and our allies this country successfully defended itself 25 years ago, and the politicians made use of that success to carry through certain Peace Treaties. I have no hesitation whatever in saying that those Peace Treaties made an unstable world. I, and many of my hon. Friends behind me, said that at the time, and we have never ceased to point out the instability of the world that those Peace Treaties and their early administration were creating. Hon. Members on the other side of the House did not agree with that view, but now, if I understand the position aright, they have nearly all come round to our way of thinking. At any rate, the Prime Minister said so a few months back, and a great many of his supporters have taken the same line.
What was the trouble about that unstable world? The trouble was that wrongs were, in fact, not able to be righted except by force. There was an alternative method but, unfortunately, the policy of the victorious nations made inoperative the important provisions of the Peace Treaties that were embodied in the Covenant of the League of Nations. What has been happening during the 20 years since the War came to an end, is that force has been remedying some of the graver injustices of the Peace Treaties, but the trouble in remedying wrong, not by just arbitrament but by force, is that force, having righted certain wrongs, proceeds to vaunt itself and claims that it can inflict fresh wrongs in their place. When this began to happen we on these benches took the view that world order could be preserved only by collective action. The Government, while they paid lip-service to that idea—in fact they fought a general election with collective security painted on their banners—never appreciated the fact that this was a real, practical method of preserving the peace of the world. They imagined, quite erroneously, that this was some fanciful idea of a number of visionary people. In consequence, they took the view that the main, if not the sole object of the might and strength of the British Empire was to look after British interests.
It is a useful and proper function for our forces to protect the liberties and rights of our own people and, within


reasonable limits, to protect the territories of the British Empire, and all that that implies, but what we on these benches realised all along was that under modern conditions you cannot divide up the peace of the world into segments, still less can you divide the democracy and freedom of the world into segments; and that if you proceed on the hypothesis that British might and strength is to be used solely in the interests of the British Empire you will not get enthusiastic support from other parts of the world in favour of that end. If, therefore, you want to defend the liberty and the democracy of this country and the territorial stability of the world you have to do it not only in the narrow confines of your own position but you have to do it for the world as a whole.
There are, of course, limits. I am not suggesting that this country can be a knight errant, going out to take a quixotic attitude in regard to any question that arises anywhere in any part of the world; but I do say that, on larger issues, if this country is going to get the support of other parts of the world for liberties here at home we have, in the main, and on general lines, to support liberty and democracy elsewhere. I am not going into great detail, but it will be within the knowledge of the House and of the people of this country that when trouble arose in China, in Spain, in Abyssinia, the Government took the view that they were only going to intervene as far as our own private British interests were concerned. Finally, when it came to Czecho-Slovakia, they took the same line, with consequences which we all know. The vital British interest is more than the British Empire; the vital British interest is peace, and peace can only be maintained on the basis of democracy, liberty and justice. When democracy, liberty or justice are threatened, still more when they are destroyed, peace has already gone, even though war, in terms, has not broken out.
We on these benches foresaw this position two or three years ago, when these questions were beginning to come into prominence. We saw that what was happening in the world was going to threaten not merely the peace of other countries but the peace of our own country, and we demanded that, while the gain which

force had got was still small, action should be taken to uphold rights, liberty and democracy in other parts of the world. What were we told by hon. Members on the Benches opposite? They said: "You are war-mongers; you are seeking to make a. quarrel. It will be time enough to think of making a protest when the threat to liberty and democracy comes right home to our own shores." Our answer to that was: "That may be too late. In any case, by that time the forces that are causing aggression and the repression of liberty will have grown so big that the conflict will be very much more dangerous when it comes."
We cannot shut our eyes to the fact that the statesman who was leading this country at that time, although he was respected in all parts of the House, had on his own confession deliberately concealed from this House and from the country the true facts of the situation. He told us in a speech of great candour that he did not disclose what he knew about armaments on the Continent for political reasons in this country. That is one of the gravest events in history, and much as I respect him in many other ways I feel that it brands him as largely responsible for many of the things which have happened since. And so the Government, protesting all the time that they were in favour of collective security, that they believed in democracy and in liberty, allowed the Peace front, that was, to be broken up, and they encouraged in consequence the idea that naked force could alone right wrongs and could create wrongs afresh if it so chose. They encouraged the idea throughout the world that it was "each for himself and the devil take the hindmost," that we were not going to do anything to protect China from the inroads of Japan, and though we made certain moves in regard to Italy and Abyssinia we were not really going to risk anything serious on the issue, that we were going to do nothing to uphold democracy in Spain and at the last that we were going to allow Czecho-Slovakia to be destroyed.
That was the way of putting the British Empire into isolation, and very nearly destroying the heritage, not only the territorial heritage but the heritage of liberty and democracy, which our forefathers have built up for us and for our fellow citizens. At the very last moment, when aggressive force had reached colossal


dimension, the party opposite saw the danger into which they were running and in consequence they began to recreate the Peace front which they had done nothing to uphold when it existed previously. They made treaties guaranteeing the liberties of other countries, treaties which in ordinary circumstances were most dangerous arrangements. We in this party, having realised that something of the sort ought to have been done and could have been done years before when the consequences would have been far less serious, felt that "better late than never "; although grave dangers were involved. But the alternative, seen at last by the Prime Minister and his followers, was still more grave and dangerous than the course they were undertaking. Therefore, instead of making a stand which would have been easy a few years back, this country is being called upon to make a stand to-day. Part of the price we are having to pay to-day for the delay are all the measures of military and civil precautions which have been passing through this House in the course of the last few weeks. Part of the price is the enormous bill which the Chancellor of the Exchequer announced yesterday, and a part of the price is the bill which is being presented to the House this morning by the Secretary for Overseas Trade.
Let the House not think for a moment that this is necessarily the end. All the money which the Chancellor of the Exchequer announced yesterday is only the money up to date. The terms and the amounts of money in this Bill this morning are only the credits as far as the Government at present see them. There is nothing to suggest either in the Chancellor of the Exchequer's speech yesterday or the speech of the right hon. Member this morning that we have come to the end, that all the lines of the picture are already painted in and that there is nothing left but to take the canvas down from the wall and frame it as a momento for posterity. We are in the middle of this trouble. These sums, fantastic as they would have seemed a generation ago, are only what are involved up to date. No one can say, the Minister cannot say and the Government of which he is a member cannot say, how much further we may yet be called upon to go.
What is going to be the position of His Majesty's Opposition in fact of these facts.

We are like people living in a house realising that those who were in charge of the house were taking steps which made it very likely that a conflagration would break out. That is what happened 20 years ago when the Peace Treaties were created. In accordance with our gloomy forebodings fire did break out, not at home, but nearby. It began by being a small fire, and we called upon the Government to take steps to put the fire out while it was yet of manageable proportions. The Government said, "Not at all, this fire has not yet licked up the walls and the furniture of the house in which we are living, it will be dangerous to attempt to put the fire out, and for the moment we will leave it alone. "The fire has grown bigger and bigger, it has become more and more threatening, and the Government now realising the imminent danger in which the whole civilisation of the world is placed and the whole strength and integrity of the Empire, have at last found the necessity of taking some action. They say to us, "Are you going to stand aside?" We say, "No. We think this fire is due to your lack of understanding in days gone by; we think its growth is due to your failure to put it out in its early stages." But if the fire goes on it it not a question of thinking who is to blame, it is a question of all hands to assist, and because we love our country and believe in its future, because we believe in democracy and liberty, not only here but throughout the world, we say to the Government that if you are really going forward to put out the fire now we are bound to give you our help.

11.54 a.m.

Mr. Harold Mitchell: I believe that Members in all parts of the House will welcome the Bill, and I want to congratulate my right hon. Friend on the able way he introduced it. I think the Bill is urgent. We have to recognise that trading conditions have changed greatly in recent years, and that the commerce of all countries is being more and more regulated by governments. In many markets this country is competing against other countries which sell exactly the same goods as we produce, but use the whole force of their governments in order to secure trade, so that in those markets the private traders of this country are in an extraordinarily difficult position. The system of export guarantees will fill a


position of increasing importance everywhere as long as this system of world trade continues, and will gain for this country contracts which otherwise would be lost to us. We had a very good example of export trade guarantees in connection with Russian trade in the earlier days, and in that case the results were very good. On the whole, export trade guarantees have not only brought orders to this country and thereby created employment, but have resulted in a profit to the Government. Therefore, while I agree with the point of view put forward by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), who expressed anxiety with regard to these large sums, I hope that, from a purely commercial standpoint, the transactions may turn out to be quite sound, at any rate in many cases, although I recognise that credits for armaments are on a rather different basis from normal trade. Although it would be outside the scope of this Bill, I should like to say, in passing, that there are certain cases in which I should like to see the Government take a hand in guaranteeing transactions within this country. I believe there is a large field for such activity, but I cannot pursue the matter on this occasion.
The main reason I am intervening briefly in this Debate is that I have just returned from a visit to four of the five Balkan countries which are likely to come particularly within the scope of the credits envisaged in this Bill. At the present time, Balkan trade is extremely difficult for this country, because it is very largely dominated by Germany, which is able to absorb the goods produced by those countries. That is even more the case to-day than it was before Germany included Austria and Czechoslovakia. It is natural for geographical and other reasons, that Germany should be the economic outlet of the Balkans, but, obviously, it is not satisfactory for those countries when they find that in some cases practically 100 per cent. of their products go to one country. Such a situation is one which may have unfortunate political repercussions. I feel that if we are to make a success of these export credits, we shall have to look a little further ahead. Credits are absolutely essential and will enable us to do useful work in fostering economic rela-

tions between those countries and this country, but we know from our experience of debts and credits, that the only way in which ultimately the debtor countries can serve the interest on loans is by exporting goods. If we are to be paid, as we hope to be, for these credits that are being provided, it is essential that we should do all we can to buy some of the products of those countries.
There are great difficulties in regard to trade with the Balkans, particularly as many of the things which they produce are now obtained by us from other sources. However, I ask my right hon. Friend whether it would not be possible —to take one commodity—for this country to buy a small part of the tobacco of some Balkan countries. If we are to give credits to those countries, we must take something from them in exchange, and I consider that it would not be unreasonable in these times, when we are asking sacrifices from industries throughout the country, that the rich corporations, and to some extent monopolies, which one finds in the tobacco trade should be asked to play their part in doing something to assist the policy of the Government. These things go beyond being ordinary transactions, for we are not living in normal times. It would make a tremendous difference throughout the Balkans if we could take even a small part of their tobacco crop, and thus give them some alternative outlet for it. I know there are objections and difficulties in this matter, but surely it is a case in which the Government should use their persuasive powers to the maximum. Another small industry of a similar kind in Greece is the production of raisins. I know that competes with an industry within the Empire, but at the same time it is a sphere in which the Government ought to do all they can.
I want to emphasise the great desire of the Balkan countries to trade with this country at the present time. I was very much impressed, particularly in Turkey and Greece, with their desire to purchase British goods where possible and to extend and increase their trade with us. But each of those countries is in a difficult economic position. Turkey was at war almost continuously from 1910 to 1922. They have done an immense amount to rebuild the country, but they must have credits if they are to go ahead. I know


that Turkey is a country which will be very chary of accepting loans, for the memory of the old Ottoman debt is always with them; they want to develop their country with the minimum amount of foreign assistance, but obviously, they must receive some measure of credit, and in building up the new industries which they are introducing at the present time, they must obtain assistance from other countries on easy credit terms. I believe this Bill may enable more British trade to be done with Turkey. Greece is in a similar position. There you have a country which has just accomplished the gigantic task of absorbing about 1,500,000 refugees into a population of 5,000,000. That has put an immense financial strain on the country, and anything that could be done in the way of credits would make Anglo-Greek trade more easy.
I have dealt with this Bill from the narrow aspect of the Balkans, although I know that it covers a very much wider field than that. The Balkan countries, indeed, represent only a fraction of what is contemplated under the Bill, but they provide an interesting illustration of the scope of the Bill and the use that might be made of it at the present time. In conclusion, if we are to take an active part in the affairs of the Balkans—and it is clear now that we are deeply committed—we must combine an economic policy with a political policy. It is no use giving political guarantees if we entirely ignore the economic aspect. I welcome the active policy which my right hon. Friend has pursued ever since he has been at the Overseas Trade Department. I think all hon. Members recognise his energy and drive, and I believe that there is nobody who could put more drive into British trade policy than he has done. I hope he will do all he can to get the other Departments of the Government, the Board of Trade and the Foreign Office, to support him in an active commercial policy. I hope we shall adopt, if I may say so, a more aggressive trade policy, and I believe that, if we do, the results, both political and economic, will more than justify it.

12.6 p.m.

Mr. Bellenger: I wish to state at the outset that I am not in disagreement with the principle which is enshrined in the Title of this Bill. The speech of my right hon. Friend has shown that we on these

Benches are just as sympathetic towards the principle of establishing and increasing British trade overseas as hon. Members opposite, but I propose to offer some criticism of the machinery which the Bill proposes to utilise in the expenditure of this large sum of money—£ 60,000,000 at the minimum, and we do not know how much at the maximum. There was a time when hon. Members opposite would have deprecated State interference in British industry or trade. Apparently, we are now proceeding—helter-skelter in many respects—along the road towards State control and, perhaps, State planning of industry. I suggest that this Bill, in effect, sets up the British Government in the business of a banker and insurance agent. The prospectus, if I may call it so, is embodied in the Clauses of the Bill, and it has to be examined very closely by the shareholders, the British taxpapers, who may be called upon to put up large sums should defaults occur in those countries which are prepared to take our goods, but may not necessarily be prepared to pay for them.
To give one illustration of how little control this House will have over the trade or financial acts of the Board of Trade under this Bill, I would recall the answer to a Question which I put to the right hon. Gentleman the Secretary to the Over seas Trade Department on Monday. I asked how much in sterling guarantees had been given to British trade in an area which is very vital to British trade interests, namely, China. The right hon. Gentleman told me that it was not the practice to state the amount of the Department's commitments in respect of a particular country. Imagine my surprise this morning to find a provision in Clause 2 of the Bill that returns shall be submitted to this House in due course showing the amounts guaranteed to different countries under this Bill. Would I be unreasonable in asking the right hon. Gentleman, or whoever is to reply, to give me, now, the information for which I asked on Monday, because I have something critical to say about the financing of British trade in China by the Overseas Trade Department? I suggest that we have expended very little money in that area where, presumably, we are in sympathy with those democratic interests to which my right hon. Friend referred in his very cogent speech this morning.


When I endeavoured to ascertain how much money we have put into China, not only to help China but to foster British trade in that area, the right hon. Gentleman evaded my question and sheltered himself behind what he termed the tradition of the Department not to give information in respect of any particular country. I suggest that he cannot maintain that excuse, and again I ask him to give the House and the country the information which I sought on Monday. How much are we helping China, or how much are we going to help her, under this Bill?
I would also ask, what is the relation of this Bill to the British public and the British taxpayer? We all understand its purpose. It is not only to widen the ordinary channels of British trade. Most hon. Members will agree that at present it is not possible for ordinary exports from this country to oversea countries to be facilitated, even if the Government are prepared to place large sums at the disposal of our exporters. My right hon. Friend has informed the House that, to a large extent, the trade which will be fostered under this Bill will be extraordinary trade, the ultimate object of which will be the strengthening of those countries which are, presumably, in sympathy with our democratic opinions and with our cause, making them better able to resist an aggressor, should it become necessary to do so. I suggest that hon. Members opposite should examine this Bill as shareholders would examine the prospectus of a company which floated its issue on the market. After all, to a certain extent the taxpayers of this country will be the debenture-holders under this Bill, and, as far as I can see, though the prospectus does not give us very much information on the point, their tangible assets will be very small. We do not know to which foreign governments it is proposed that we should lend this£60,000,000, although the right hon. Gentleman has given some indication. The promissory notes of those foreign governments may be worth their full nominal value plus interest, or they may not. The debenture holders, the British taxpayers, have no say whatever. They have not the right of foreclosure which ordinary debenture holders in an ordinary company would have.
Therefore, I suggest to the right hon. Gentleman—and this is my main proposi-

tion—that there should be some closer control by Parliament, that there should be some co-operation or liaison between Parliament representing the taxpayers and that body, whatever it may be, the Board of Trade or the Advisory Council, which is to operate with this large sum of money. At present how is this done? Mainly on the advice and guidance of what is now called, I think, the Export Guarantees Advisory Council. In December, 1938, I asked the right hon. Gentleman for the names of that Council, and I was told that the Council had not been set up, but that an Advisory Committee had been operating under the Export Guarantees Act, 1931. Am I right in assuming that the Council has now been set up and that in the main its constitution is to be that of the Advisory Committee, the names of the members of which the right hon. Gentleman gave me some time ago?

Mr. R. S. Hudson: The Advisory Council has nothing to do with the Bill, as I explained in my speech.

Mr. Bellenger: Then who has anything to do with it?

Mr. Hudson: The Board of Trade.

Mr. Bellenger: Who is to advise the Board of Trade on the various contracts and the various proposals which may emanate from foreign countries in regard to trade? Does the Bill mean that we are simply placing a certain amount of money at the disposal of other countries and leaving them to expend it as they think best? Is there to be no control or is the Board of Trade the body which is to exercise a certain amount of control? My contention remains that there should be established a committee of this House, such as has been suggested in relation to Colonial problems and also foreign affairs, to look after the directon of the expenditure of this money and to see that it is wisely used, so that British taxpayers may not ultimately be called upon to face heavy deficits, as I fear they will be under this Bill.
Carrying my illustration of the public company el little further, I suggest that we are in the same position in this House, as far as our control or criticism is concerned, as shareholders in a company out side. All that we have to do is to sit here and listen to the managing director


explaining, very suavely I admit, some of the objects of the Bill, giving us as little information as managing directors or chairmen of boards of directors do, and all that we are asked to do is to be as careful as we possibly can with our questions, not to be too persistent, and to join in voting thanks to the staff at the end of the proceedings. That is not the proper function of Parliament. The proper function of the elected representatives of the people is to see that the taxpayers' money is wisely spent. It makes no difference whatever that the purpose of the Bill may be genuine. Our purpose is to see that moneys of this magnitude are wisely expended, and that the British taxpayers may be called upon as little as possible to implement the guarantees which the Board of Trade set up under this Bill.
Under Clause 2 of the Bill some sort of report will be submitted to Parliament at some time as to the operations, but are any accounts to be submitted? Will they be submitted to the Public Accounts Committee? Is there to be any real control whatever over the Board of Trade, or are we just expected to accept the report which the Board of Trade will put before the House with very little comment? If the Public Accounts Committee are to be called in to look at some of the accounts I suggest that that Committee is already overloaded with work, and that that is one more reason why there should be a committee, or at any rate representatives from all parties in this House, either to act in close co-operation with the Board of Trade or to act on an advisory council. We must accept the implications of State banking and State insurance, for that is what it amounts to.
Therefore, I am concerned to ask why it is that at the present time when, as my right hon. Friend said, we have to raise large sums of money by way of loan, not only to meet our own requirements but to back up and buttress the amounts which we shall be called upon to provide under this Bill—why is it that at the present time our banking system is so out of date? I shall not go fully into that question, because obviously it would be out of Order, but I do suggest to hon. Members opposite that with the present ineffective system of State banking it may be that the large sums of money which the right hon. gentleman will require under this Bill, and which the Chancellor

of the Exchequer will require under other Bills, may not be able to be provided without injury to British credit under the present system. Therefore I urge upon the right hon. gentleman that in close connection with the purpose of this Bill some attempt should be made to bring up to date the central banking system of this country, on which ultimately we have to rely for the money which will have to be provided for this and other purposes.
There are three questions I would like to ask. What control will the Board of Trade have over the prices to be paid under the various contracts which presumably will be entered into for the dispatch of British goods to their ultimate destination overseas? We know that at the present time, with the huge sums being expended, prices do not really appear to matter. Therefore, if British taxpayers should be called upon ultimately to foot the Bill, how big is the bill to be? May not that bill be largely inflated because the prices of the goods are originally inflated in the contracts between our exporters and the importers overseas? Another question is this: In the definition Clause on page 6 of the Bill a definition is given of exports, which are defined as meaning exports from the United Kingdom. I wish to ask whether that includes re-exports. It it does, may it not be that we shall then not necessarily be helping British trade alone, but to some extent supporting overseas suppliers of raw materials whose interests may not necessarily coincide with our own? A third question is this: How much will the additional sum be that will be required by way of interest? £60,000,000 is the amount of capital that we are asked to provide under the Bill. How much will the additional bill be for interest? Can the right hon. Gentleman or his Department estimate that at all? I have seen, and no doubt others have seen, in various financial newspapers, sums ranging upward to nearly as much as the capital itself. Although we are significantly told in the Financial Memorandum to the Bill that it is not possible to forecast the charge which will be imposed upon the Exchequer, I think we should know something about the size of our commitments.
In conclusion, I would only say that it is obvious from what my right hon. Friend has said and what I have said


that we on this side of the House are not against the principle of fostering British trade. I could only wish that that trade was the kind of British trade that we all desire, the kind of trade that we had in the piping times of peace. I fear that the trade and some of the services which we are to finance overseas under this Bill may not be trade or services consistent with those peaceful ideas which emanate from all parts of the House. But there it is; we have to accept facts as they are. My right hon. Friend on a very broad canvas has painted in vivid colours the reasons that have led us to this pass, that we are asked to hand out large sums of money with very little control by this House for the ostensible purpose of fostering British trade. I fear that the outlay will not repay us the dividends that we expect.
I fear, also, that the Bill will assist certain isolated sections, producers, agents or the money changers, but that it will not have that wide and beneficent effect that legitimate trade should have in all countries, and that it will not percolate down to the humblest strata of those engaged in trade—I mean labour—as it ought to do. Although I understand that we are not opposing the Government this morning by way of a Division, I do suggest to the House that the criticisms which have been offered from this side are well worthy of consideration not only by the right hon. Gentleman himself but by other hon. Members. The day will come when we shall be sitting on those benches and hon. members opposite will be sitting here. Will they then be prepared to give us carte blanche as we are prepared to do by them this morning in regard to this Bill?

12.25 p.m.

Mr. Loftus: This Bill has two objects, one economic and the other political. One is to foster the export of British goods abroad and the other, the political object, is to strengthen those nations with whom we are co-operating politically. I think, as the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) said, this is an economic weapon in the white war which is being waged to-day in the world. When I came down to the House this grey morning I imagined that we should discuss the economic position only, and I confess that I was rather astonished at

the right hon. Member for East Edinburgh devoting the greater part of his speech to a resumé of past foreign affairs debates in this House. He said he was painting a broad picture, but I think it was a very old-fashioned picture, a too simplified statement which the world today no longer believes in. In all sincerity, I would suggest to the right hon. Gentleman that there is not a party, there is not an individual of any prominence in public life in this or any other country who must not bear his share of the cause of the difficulties; in the world to-day. I would say of the right hon. Gentleman that his speech exemplified those good intentions and that reluctance to face realities which are partly responsible for our present position. He talked about the peace treaties and the attitude of his party at the time they were made. Many of us felt the same.

Mr. Benson: Did you say so?

Mr. Loftus: Certainly. I published in 1922 an appeal that Germany, as one of the partners in building up a European civilisation, should be preserved as a great nation. I suggest to the right hon. Gentleman that it was really the good intentions of the framers of the peace treaties that are partly responsible for our difficulties to-day. It was that phrase "self-determination" that led to trouble. When the right hon. Gentleman used the phrase that the Government of this country would not use—I wrote down his words—"the real, practical method embodied in the League" for preserving the peace of the world, I say again that that is completely divorced from realities. That is the whole trouble of the world to-day, that the Covenant of the League was so framed by that fatal method of the unanimous Clause that it was impossible to rectify the grievances of nations and impossible to modify treaties because you had to have a unanimous Council. I do blame all parties, but particularly the Opposition parties, for this, that when they realised this, instead of setting their hands to the work of revising the Covenant of the League and making it into a real Covenant to deal with a dynamic world requiring change, they regarded the wording of the Covenant as something inspired and sacred and above criticism. Because they had not realised their ideal, they ideal the real, and this is a cause of our present


state. But I am diverging, and I would like, to get back to hard economic facts.
The right hon. Gentleman made some very interesting points and wondered whether these great sums that we have to find to-day, the loan announced yesterday and the loan announced to-day, may not be too great for the economic structure of the country. I agree that these vast sums are getting towards a rather dangerous figure, but I think we can bear them, and I would put certain figures before the House to suggest that we can bear these loans, colossal as they are. I estimate that in 1938 the gross income of the country was about £5,200,000,000. Out of that, we required approximately— these are very rough figures—£400,000,000 for replacement and maintenance account. That left a net income of £4,800,000,000. I estimate the national net income at £4,800,000,000 and consumption at approximately £4,400,000,000, leaving the net savings of the nation at about £400,000,000. But this last year there has been a very great increase in employment and output, and in those conditions I think our gross income is going up considerably, probably by £700,000,000 or £800,000,000. I estimate that our savings this year should be about £550,000,000. Therefore, I think we can bear the burden, heavy as it is, of these vast loans.
Now I would like to turn to the most valuable contribution, if I may say so, from my hon. Friend the Member for Brentford (Mr. Mitchell), who pointed out that you must always bear in mind that when you export goods by way of loan you can only get either repayment of capital or payment of interest in goods by allowing the import of those goods directly or indirectly into your own country, and every effort to check that import will make it extraordinarily difficult or may render impossible the payment of interest or repayment of capital invested either in foreign lands or in our own Empire. I would strongly support the proposal that he made that we should use every possible effort to increase our import of Balkan tobacco. I think that is a matter of infinitely greater importance than appears to be probable to anyone except my hon. Friend, who knows the importance of it. I echo his plea that pressure should be used to induce the great company here controlling tobacco to import and use Balkan tobaccos for blending. I know I shall be answered by the

answer, given so often in the modern world, that the public taste will not stand it. I believe that that argument is generally quite untrue. I believe that public taste is a thing that is manufactured by advertising, and I believe that you can put almost any article on the market and create a public demand, however bad it is. I think we can quite easily blend this tobacco with our own.

Brigadier-General Sir Henry Croft: I hope my hon. Friend has not forgotten another point. There are great territories in the British Empire which are producing tobacco in increasing quantities. We must be careful not to ruin our own friends. I only want to remind him of the fact.

Mr. Loftus: If it is vital to trade with these countries and it is also vital to trade with the British Empire, and you have only a limited market, obviously the only possible alternative to satisfy both is to increase the consumption of the home market. That does not apply to tobacco only, but to all goods. My hon. Friend the Member for Brentford (Mr. Mitchell), who has been in Turkey, referred to the necessity of importing raisins. It would be a great mistake to knock out imports of these from the Balkan States by imports of Empire raisins. I would suggest for the consideration of the Secretary for Overseas Trade whether we could not use these export credits, not only for trade purposes, but in order to spread British culture. Could not a small amount of this money be used to establish in Turkey a British School of Archaeology? I know that, were that done, it would be warmly welcomed by the most influential people in Turkey.
I have been for many years against the export of goods and credits. I support this Bill on account of its political implications, while recognising that it increases the vast burden of international debt, which, I think, is one of the causes of the distemper of the world. I think that there is growing to-day throughout the world, in British Dominions and Colonies and in independent nations, a feeling against getting into large-scale debt. There is a revolt against the idea of paying perpetual tribute to certain European countries. I think this idea is beginning to spread, and certainly you


find it in the newspapers of such countries as Germany and Italy to-day. Therefore, while I welcome the Bill, I deprecate what often appears in our newspapers— talk about solving the difficulties of the world by lending money to such countries as Spain, or even Italy. We should not suggest that that would meet all the economic requirements of those countries by these methods. The hon. Member for Brentford said it was perfectly natural that Germany should have a large portion of the Balkan trade. We must all recognise this, while seeking to prevent a complete monopoly, which could be used for political purposes. I go further. I feel that we have to seek, above all things, new methods of economic appeasement and adjustment which will allow such nations as Germany and Italy considerable freedom to trade, not only in the Balkans, but elsewhere, so that their people may be freed from the fear that in a peaceful world they would have difficulty in importing the goods that they require.
While I welcome the Bill, I could wish it had been on a vaster scale, embracing all European countries. That may yet come. I think it must come if war is to be averted. I could wish that, in addition to the Balkans, it embraced yet more countries and laid the foundations of an economic United States of Europe. I believe that that is necessary, because economic grievances and mal-adjustments are at the basis of so much of the trouble from which we are suffering. I wish the Bill could have been extended, and I hope that our economic ideas will not stop here, merely in building up this front, as it were, but that we shall proceed with our task of economic appeasement because I do not believe that we can avert war unless we can so arrange the economic position of the world that such nations as Germany and Italy will be free to seek peace and to disarm without the fear of a vast unemployment problem, and without the fear that they cannot keep up and improve the standards of life of their people by trading freely with the rest of the world.

12.44 p.m.

Mr. Benson: I am afraid my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) touched the last

speaker very much on the raw when he accused the party opposite of doing more than any other Government in the world to destroy the usefulness of the League of Nations. I am afraid that the heat of his outburst arose largely from a guilty conscience.

Mr. Loftus: Four or five years ago in almost every newspaper in England I was advocating facing realities, facing the economic grievances of Germany and Italy, to prevent the state of the world at which we are now arriving.

Mr. Benson: I am not speaking of the hon. Member personally. My right hon. Friend's attack was not made on him, but on his party, and that it is the conscience of his party that is being touched. The hon. Member himself may have been pleading for a recognition of realities, but when did his party recognise realities? This is the first Bill we have had from them which recognised the fact that small nations which are in danger of attack should receive help from this country. What happened when Japan invaded China? Was a Bill like this passed? No. The hon. Member's own Government took steps to prohibit China buying arms. What happened to Abyssinia? Was a Bill like this passed? The hon. Member's Government took steps to prevent the Abyssinians buying arms. The hon. Member's Government took steps to prevent the Spanish Government buying arms. Wherever there has been aggression in the past this Government has for some curious reason or another taken all the necessary steps to put the aggressor nation in a more favourable position.

Mr. Crossley: Should we have been paid one penny for any arms sent to Spain?

Mr. Benson: Should we have been paid for the arms?

Mr. Speaker: It is difficult to associate the hon. Member's arguments with the subject of this Bill. I was too generous to the right hon. Member of East Edinburgh (Mr. Pethick-Lawrence). We cannot go over events connected with foreign-policy for many years upon the Second Reading of this Bill. We must come to an end of that.

Mr. Noel-Baker: With great respect, I venture to submit that this Bill is part


of our foreign policy, and that foreign policy considerations are in Order.

Mr. Speaker: It may be part of our foreign policy, but we cannot go into retrospective history of foreign policy over a long period of years.

Mr. Benson: I was trusting to your well-known generosity, Mr. Speaker, but the question of payment for arms sent to small countries in danger of attack does, I think, arise under this Bill. What would have happened so far as payment is concerned had we sent them arms in the past I cannot say, but had the policy involved in this Bill been carried out by the Government seven years ago we should not have been spending £720,000,000 this year upon armaments. Had we given one-third of that amount for arms to these other countries we should not be facing the bill we shall now have to pay, and possibly have to pay not merely in cash but in blood and in destruction.
With a great deal of what the hon. Member for Lowestoft (Mr. Loftus) said I am in hearty agreement. We cannot build up a prosperous world unless there is reciprocity in trade. It is perfectly simple to grant credits to other countries. As the right hon. Member said in introducing the Bill, he had had unlimited demands for credits, and we can go on supplying credits, and nobody will object, unless it be the poor taxpayer, that is, providing we do not expect those credits to be repaid, but sooner or later they will have to be repaid, and as soon as the borrower countries start repaying we should have the hon. and gallant Baronet the Member for Bournemouth (Sir H. Croft) on his legs demanding that their goods be kept out, although they cannot repay in any other way than by sending goods here.

Sir H. Croft: Since the hon. Member has so kindly referred to me, may I say that the policy which His Majesty's Government have adopted, which has had my warm approval, has in recent years resulted not in keeping goods out, but in increasing the imports of very large classes of raw materials and other goods.

Mr. Benson: That may be so in the case of certain classes of goods, but if the hon. and gallant Baronet will look at our

imports and exports now he cannot pretend that they are larger than they were 10 or 15 years ago.

Sir H. Croft: I said, in certain cases.

Mr. Benson: The trouble with the present Government is that it takes years and years to get anything into their heads. After betraying the policy of the League of Nations, after betraying collective security until we were on the verge of a war, we have now got this Bill, which is a recognition of the importance of collective security, a recognition that the small non-aggressive States must be helped by this country, not in their own interests only but in ours. Sooner or later it will be borne in upon the Government that, having made these loans, they will have to accept repayment of them in goods, and I know that when they try to facilitate that process they will find a violent critic in the hon. and gallant Baronet.
It is interesting to note that this Bill is linked up, in the first major loan, with Rumania. Yesterday a loan of some £5,500,000 to Rumania was announced. Rumania is one of the countries with which we have a clearing agreement, and a clearing agreement generally indicates that we cannot get payment for goods which we have exported to a country, that there is no free sterling to pay for the goods. If we are going to grant further credits to Rumania, even although, under the protocol under which the loan is granted, there is a credit of 20 years, or annuities extending over 20 years, we increase the difficulties of Rumania. If these countries are to be able to repay them, as the hon. Member opposite pointed out, we must be prepared to take their goods, and that undoubtedly will conflict with interests in different parts of the Empire or with those of some home producers. There is practically nothing those countries can export except raw materials which we do not produce ourselves which will not conflict with some vital interest. It is true we do not produce oil at home and there is no reason why we should not import Rumanian oil, but unless the Government are prepared to change their policy in the matter of high tariffs and Protection, as they have changed it in the matter of collective security, I am afraid that we shall have


to whistle for the repayment of these loans. I am not entirely hopeless that the Government will change their policy. Stern facts have the effect, ultimately, of producing some change in opinion, as witness this Bill. If we are to get repayment we must make some change in the attitude of the Government to the question of allowing vested interests to insist upon the exclusion of goods.
I have referred to the Rumanian clearing agreement, and I want to recount an incident that happened in reference to another such agreement. Some time ago we revised our clearing house arrangements with Italy. The agreement was come to in order to enable Italy to pay this country and, of course, payment could be made only in goods. The night after we introduced the Italian clearing agreement an Import Duties Order was introduced, putting a tariff upon tombstones from Italy. That incident shows the attitude of the Government who are apparently prepared to listen to any vested interest. Limitation of importations into this country are not going to build up a stable trade and will not get rid of the world-wide unemployment that affects every country. And if you pursue that policy you are certainly not going to see the money back that you are likely to lend under the Bill.

12.56 p.m.

Mr. R. Morgan: I want to follow the example which has been set of not detaining the House long. I merely want to draw attention to one or two aspects of the matter. I am sorry to say that, judging from my own experience, I cannot see an immediate and effective application of these credits. Some time ago we passed a large number of credits representing considerable sums of money, to be set aside for the purpose of assisting China. Four months ago I asked the Minister to state the export credits which it was proposed to grant to the Chinese Government out of the extra sum provided by Parliament, but the Minister replied that he was not in a position to give the exact details. It was generally known that the Chinese Government formulated a request which amounted to millions of pounds, and I would now like to put a more definite question to the Minister than was put by the hon. Member for Bassetlaw (Mr. Bellenger), although I do not expect a long reply in detail.
I would ask the Minister whether it is a fact that the only credits granted to the Chinese Government so far amount to a few hundred thousand pounds? The Chinese Government have asked for millions. I think the Government have good intentions, but while they have approved the principle of granting some of those requests of the Chinese Government, the circumlocution of Government offices may have prevented these amounts from being paid. I do not know whether the Americans are longer-sighted and longer in the tooth than we are, but they seem rather to have forestalled us in the Chinese market. I am referring now to credits for reconstruction in that great country of China. I see that the Americans have already granted credits to China of something like £5,000,000. I cannot think that they would do so unless they had some idea of getting some of their money back. If we make these advances, we not only help our own manufacturers but we relieve unemployment, as well as help the foreign countries for whom these exports are designed. If we were to take the general opinion of the people I am sure it would be that there is no country whom we would rather help to-day than China, in the position in which it finds itself. I would join in the congratulations which have been offered to the Minister because of the Bill. I have heard no one condemn it, although some hon. Members have criticised it harshly. I agree with what the hon. Member for Bassetlaw said, that we ought to be in a position to know at some time where these export credits have gone.

1.1 p.m.

Mr. Crossley: I did not intend to speak to-day, and I should not have done so if I had not heard the speech with which my right hon. Friend introduced the Bill. I am tempted to say a few words, also, in reply to the speech of the hon. Member for Bassetlaw (Mr. Bellenger). I would like to follow one or two of the assertions made by the hon. Member for Chesterfield (Mr. Benson), but I feel that I should not do so unless your generosity, Mr. Speaker, were even greater than it is known to be. In one sentence, if I may try, I would say that if, seven years ago, in the middle of the Disarmament Conference, we had been arming the small States of Europe, what the Labour party


would have said about that passes my imagination. However, those days are all past, and we are now discussing a Bill which embodies the rather belated realisation of the Government that they have to equip our allies and that to be effective that has to be done as quickly as possible. I do not think the fact that it is belated is due to any action of my right hon. Friend. I think that he has done marvellously for his Export Credits Department, and has achieved great things on a purely commercial basis in the past.
I could not help feeling that the hon. Member for Bassetlaw kept on mixing the commercial and the political. He used phrases like "the dividends we expect". I do not know that we expect any dividends on this Bill. It is true that these countries will pay, if they are allowed to, in their own way, and that it might not always pay us to be paid in the way that these countries would like to pay. We are purchasing by this Bill a measure of security. We are purchasing an eastern front. What can we buy? We want to buy all that we can from the Balkans. Several hon. Members who have spoken from this side of the House have made Free Trade speeches and I welcome that fact; all the same, it is very difficult for us to take large quantities of, say, Greek currants. The Imperial Tobacco Company ought to do far more than it does in taking Turkish and Balkan tobacco.

Mr. Maxton: Would the hon. Member smoke it?

Mr. Crossley: I do not smoke cigarettes.

Mr. Maxton: Is that why the hon. Member suggests it?

Mr. Crossley: If they were blended I am sure it could be done. The Imperial Tobacco Company have made similar blends, and people have said that they made quite good cigarettes. They have been advertised for a little time. Not long ago the company were saying that people would not smoke Empire tobacco, but not only are people smoking Empire tobacco now but the cheapness of the cigarettes brought about by the introduction of Empire tobacco has enormously increased the net total of the cigarettes smoked in this country.

Mr. Maxton: That is where your ignorance of cigarettes comes in.

Mr. Crossley: The hon. Member is certainly a greater expert on cigarettes than I am.
There is another purpose behind the Bill. It is part of the answer to the economic methods of Dr. Walther Funk. If ever trade is to be freer in this great area of Europe in particular, those methods have to be combated. I do not know whether hon. Members have read Lloyd's Bank Monthly Review this week, but it contains an article, written by an economist, which points out the difference between the sort of trade agreement which our Government have concluded with the United States, and which Mr. Cordell Hull has been concluding in various parts of the world, and the sort of trade agreement entered into by Dr. Walther Funk, which aims simply at a complete economic monopoly between two countries—a complete barter arrangement, absolutely exclusive. This sort of trade warfare— because it is really a form of warfare—has to be combated by us to-day, and the present Bill is a part of the machinery by which the methods of Dr. Walther Funk are being combated. If ever freer trade is to return to this area of Europe, a Bill of this sort is necessary, even if on some parts of it we may lose money.
There is only one other point to which I desire to refer, and that is the important one which the hon. Member for Bassetlaw (Mr. Bellenger) raised about the prices under the contracts. I thought he was a little unfair to the Board of Trade in assuming that they had no reasonably efficient officers. I always understood that the Board of Trade was full of gentlemen with economic training who were perfectly equipped to advise the Government, and, indeed, whose main function it is to advise the Government on matters of this kind.

Mr. Bellenger: Did the hon. Member hear the Chancellor of the Exchequer the other day talking about the balls that got past the wicket-keeper? I was only following up that illustration by suggesting that a good many balls would get past even the Board of Trade.

Mr. Crossley: But the wicket-keeper there was not the Board of Trade. The wicket-keeper in that case was a lot of Service Departments who had no real experience of a vast output of munitions. The Board of Trade for a century have


had intimate experience of our export trade, and there is a great difference. That experience has now accumulated, and, as regards what the hon. Member said about prices, I would point out that there is a yardstick for nearly every form of munitions production. The Government know perfectly well to-day what is a fair price for any article of munitions and what is not. It is not the main producer who is getting too much profit there; but the sub-contractors in many cases are. I believe that here the Government have a perfectly good yardstick by which they can judge whether the price named in any particular contract for a foreign Government is or is not a reasonable price.

1.10 p.m.

Mr. Maxton: I do not propose to enter the higher realms of finance, or to bring any note of controversy into the discussion of this Measure. I am strongly in favour of the encouragement of overseas trade in every possible way. But I am interested in the straits to which capitalism finds itself brought. I have nothing to say against the methods adopted here for obtaining some increase of overseas trade in a certain direction. If a customer wants to buy something and says to us: "I would like to buy your goods very much, but I have not any money," and if we say, "Do not bother about that, old fellow; here is the money; come and buy from us," I think that that is good; but it needs a whole lot of extension. I am faced with the urgent necessity of getting a new suit of clothes. I have been told by a number of my colleagues in this House, in the kindest possible way, that I require a new suit. I have come to the conclusion that in a multitude of counsellors there must be some wisdom, and I am going to get it. But I am in the same position as Rumania and Poland and a lot of these other people at the moment—I am a little short of ready cash; and I want the Minister for Overseas Trade to consider whether he cannot adopt a similar method towards me, and come to this House with a Bill which will enable me to get a new suit of clothes.
I read on the posters, "Eat more Fish," "Eat more Fruit," "Wear more Cotton," and so on. I would like a little more of all of these things, but I have not got the cash, and I am hoping that the

Minister for Overseas Trade, or the Minister of Labour, or the Minister of the appropriate department, will come to me one of these days and say, "Do not worry about that, old fellow; we will give you the necessary credit." [Interruption.] The difference between hire purchase and this proposal is that the hire purchase fellow wants something down right away, and something every week, whereas the whole of this proposal rests on faith in the future, on the faith that some day, perhaps, some of this money will be paid back, though the hon. Member for Chesterfield (Mr. Benson) said we hope it never will be paid back.
We have got into a most interesting situation in the world's affairs. I am terribly distressed because I read yester-day in the newspapers, and again this morning, that the world wheat crop is the greatest that has ever been grown, and that it is a disaster. I can see widespread starvation in this country and in other countries because we have a super-abundant harvest of wheat in all parts of the globe. We have now the tragic state of affairs that we cannot consume. Putting the jocular element in the background, this is going, at a not too distant date, to lead to a complete burst-up of the whole system unless the Government are prepared, not merely to subsidise foreign countries and give them the necessary credits to enable them to get the goods they want, but are prepared to turn to their own citizens and say, "We are going to put you, either by this device or by some other device, into the position of consuming infinitely more of the material things that are produced than you are consuming now". That means that you are going to have to abolish poverty, and I am afraid that that will be a great matter of regret to His Majesty's Government.

Mr. Hannah: No.

Mr. Maxton: I hope the Minister for Overseas Trade recognises that the united voice of the back-benchers on the Government side of the House is out for the abolition of poverty immediately. I do not know what the hon. Gentleman's views are about an increase in old age pensions—

Mr. Hannah: I am very strongly in favour of it.

Mr. Deputy-Speaker (Colonel Clifton Brown): Old age pensions are a good deal beyond the scope of the Bill.

Mr. Maxton: That may be so, but I was trying to take the Bill to its logical conclusion. I am thinking of the day when the loans to Poland or Rumania, or any other European country, begin to come back to this country. The problem that has been set by every speaker I have heard is that of what is to happen when these countries begin to send these goods back to this country, and we are unable to absorb them. The problem of the old age pensioner with 10s. a week becomes an important element in the economy of the nation, because it is no use saying, "Eat more fish," "Wear more clothes," and "Smoke more cigarettes"to a person who has only 10s. a week. I leave the matter at that point.

1.16 p.m.

Mr. Hannah: In this Debate there is no party feeling one way or the other. Mr. Speaker has rightly refused to allow hon. Members to range from China to Peru, but I regret that the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) did introduce a rather controversial element. My main criticism of his speech would be that he seems to see some of the most complicated things in the history of the world as if they were extraordinarily simple. When he referred to the overthrow of the Chinese war lord in Manchuria —

Mr. Deputy-Speaker: The hon. Member himself indicated that the right hon. Gentleman's remarks were out of order, and now he is following them up. That will never do.

Mr. Hannah: I am sorry. What I intended to say was entirely along the lines of this Bill. Various speakers have said that we wanted more Balkan tobacco. I cannot express any opinion on that, because I do not smoke any sort of tobacco. [An HON. MEMBER: "Shame."] Yes, it is a shame, but it is a fact. Trade might be enormously increased if we had a little more imagination. Two years ago I had the privilege of staying in the Balkans, and particularly in Rumania. I was especially impressed by the peasant costumes there. They are of such a character that if the hon. Member for Bridgeton (Mr. Maxton) had clothes of their calibre he

would not be in the deplorable condition in which he now describes himself as being. My wife made quite a hit by appearing at social gatherings in the dress of a Rumanian peasant, and if a few prominent people would introduce fashions of that kind we might get a demand for old types of clothes of very great beauty, which would give us a very much more satisfactory atmosphere than the fashions we have in dress at the present time. When there is no lady Member present in the House, I am afraid it is an unfortunate time to introduce the subject of ladies' dress.

Mr. Deputy-Speaker: The hon. Member must not discuss ladies' dress on a Bill dealing with overseas trade.

Mr. Hannah: If there were a little more imagination as to the things existing in foreign countries that could be introduced into this country, trade might be increased and great advantage might result, both to us and to the peasants of the Balkans. The great thing is to make us want things that we ought to want.

1.20 p.m.

Mr. Gallacher: If the hon. Member for Bilston (Mr. Hannah) would take his vivid imagination away from Rumania and get around in this country, he would see some of the old types of clothes that are worn here. That is a matter which should be of more concern to him, especially when discussing a Bill of this kind. This Bill follows from the speech made by the Secretary for Overseas Trade some months ago, when he told us that methods adopted by Germany were destroying the trade of the world. He added that if Germany maintained these methods we should fight her and defeat her. The question of the Treaty of Versailles has nothing to do with this—well that is scarcely correct for you can say that it has something to do with it, in the sense that all history is continuous, and certain demagogic campaigns have resulted from the Treaty of Versailles which have proved of great benefit to the monopoly capitalists of Germany.
When the Secretary for Overseas Trade brings in this Bill, as a reply to what is being done in Germany, we have to note that the process that he referred to in Germany was one of giving away more than she was getting. We have to follow the process. We are now far away from


the methods of the old Manchester school of economists, and from the old idea which was prevalent 50 years ago, in the period to which the President of the Board of Trade referred the other day when he said that we should be much better off if we could get back to those days. At that time the keynote of British trade was, "Buy in the cheapest and sell in the dearest market." But monopoly capitalism has changed all that, and we are now faced in Germany and in this country with the opposite—to buy in the dearest and sell in the cheapest market, to give away more than one is getting. How can monopoly capitalism in Germany or in this country, carry on business on such unsound economic lines?
Let us take away our minds from the money that is to be supplied. The real economic fact is that, with monopoly capitalism, you have changed the whole character of your economy, and that, willy-nilly, you must give more than you are getting in the fight for markets. There is only one way that it can be done, either in Germany or here, and that is by the more intensive exploitation of the masses of the people. There is no profit to be got from any other source than from the labour of the working classes. In Germany, because of the system that exists—they have not only centralised economic but also centralised political power—they are able to carry through this intensive exploitation. In this country efforts have been and are being made to get centralised power in to the hands of the executive, representing monopoly capital. You have the big monopolies using every kind of effort for speeding up industry—transmission belts and what not —and all kinds of rigid regulations, in order to get the last ounce out of the people.

Mr. Marcus Samuel: Is the hon. Member talking about Russia?

Mr. Gallacher: I am talking about the fact that in this country, although it is said that we are spending large sums on social services, those sums are not keeping pace with the ravages of monopoly capitalism arising from capitalist exploitation, and this Bill is going to make it worse. The Bill represents in its worst form this new development which has changed the whole character of capitalist

society. There are now no free individual capitalists carrying on business in the old way to which the President of the Board of Trade referred when he spoke of the good old days of 50 years ago. Everything has changed. But we do not want to go back 50 years; we want to go forward. The only way to go forward and solve the problem is not by means of economic war, which has within it the seeds of the ordinary military war. It is not by going back, but by going forward, by adopting an entirely new system of society and completely eliminating monopoly capitalism. The machinery that is operating now is of such a character that it is impossible for any individual or group of individuals to run industries and keep them in production.
If we are to keep the machinery of this country in production, we must eliminate the group control and make the machinery the possesion of the people as a whole. Only when we do that and release all the machinery from the control of the monopoly capitalists shall we end the sort of thing which is made necessary by this Bill—only then will production be free and flow continuously in this country and throughout the world. We have the serious contradiction of what is envisaged by this Bill in that millions of our own people cannot buy or get goods. I wish the President of the Board of Trade and the Secretary for the Overseas Trade Department would come with me to the street markets and see the barrows there, and notice the clothes and the boots and shoes that the people have to buy.
This is a Bill to enable other countries to get their goods at less than cost price when there are millions of our own people who cannot afford to buy them. Monopoly capitalism is responsible for that. It ties up production in this country, prevents the free flow of goods and stops the people from getting the benefits of the great advance of science and of civilisation. This Bill cannot possibly help to solve the problem, but will only accentuate the evils that monopoly capitalism has created.

1.28 p.m.

Mr. Noel-Baker: My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) said that he regarded this Measure as one of major importance. It is founded on principles in which we believe, and for that reason we have


always, from the time when it was first introduced, supported the system of export credits. The purpose of export credits is to enable traders to carry through transactions which, if they were left to themselves, would seem to them too risky, and so, by Government help, to increase trade and the exchange of wealth between our own and other nations. As the Secretary to the Department of Overseas Trade has sometimes told us, in that purpose the export credits system has been a great success. I do not want to quote a lot of figures, but he told us in recent months how, over the whole period of its history up to last year, no less than £180,000,000 worth of export had been done, that since 1934 it had increased from £14,000,000 in that year to £35,000,000 in 1936–7, and to £42,000,000 in 1937–8. That very considerable volume of export trade has been done without any loss to the taxpayer at all as a result of the scheme. Indeed, it has actually made a profit, though the Minister chooses to call it—and I think he is right—a reserve against the possibility of debts we may have to face in times to come.
Until this year the system has been worked as a strictly commercial proposition. It was only a few months ago that the Government made the revolutionary changes which the Minister has again described again to-day. Firstly, the transactions which were not strictly sound, according to the principles which we previously accepted should be carried through, because they were particularly advantageous, and this kind of risk might be taken to achieve a political end. As a consequence of that, the transactions which may be carried through under the Bill may include armaments for foreign Powers. In arranging these political transactions, if I may so call them, the Advisory Council of business men is no longer to have the responsibility, but the administration is to be in the hands of the Board of Trade itself.
A few months ago the Government asked for £10,000,000 to carry on this new system, and to-day they ask us to raise it to £60,000,000. Even in these days, as my right hon. Friend said, £60,000,000 is a considerable sum of money. It gives great power and responsibility to the Board of Trade, but for my part I am not only ready to

accept these new principles, but I welcome them. They are intended by the Government as part of the policy of preventing war by organised resistance to aggression, and I am going to argue, as other hon. Members have argued, that for that purpose the provisions might very well be on an even larger scale than those which the Government now propose. But I welcome them because I agree with the hon. Gentleman the Member for Lowestoft (Mr. Loftus) in thinking that this Bill may be a precedent for something of even greater importance in times to come—for the use of a largely expanded scale of export credits to deal with the next big slump.
Everybody knows that some day the arms race will have to end, and when it ends, long before we have a disarmament treaty, and before we actually scrap the ships, tanks and guns, on the very day that we stop extending rearmament, millions of men will be thrown out of work overnight throughout the world. We shall have to have some means of dealing with that tremendous slump. I do not think that anyone denies that it cannot be done unless we can restore international trade not only to its previous limits, but extend it far beyond any scale that we have hitherto known. When we come to expand international trade we shall certainly find it cannot be done without a large scale revival of international lending in some form. Before 1931, in order to keep world trade balanced, there had been something like£400,000,000 of new lending every year by the creditor nations, and of that amount our country used to invest or reinvest abroad something like £200,000,000 a year out of our annual national savings.

Mr. Loftus: Is it not the fact—and I can quote at least four leading economists on this matter—that every world slump has been caused by excessive international lending, and that wherever you have international lending on a big scale you must have an international slump?

Mr. Noel-Baker: I entirely agree with the opinion of the hon. Member that a great deal of the lending that preceded the last slump was very unwise and very rash and involved great losses to the investors, and even great losses to the peoples of the governments which borrowed the money. It was wasted, and for that reason, as the League of Nations


Finance Committee were beginning to say in 1931, a system of international control over foreign lending is urgently required. We shall have to have it, but it will take a long time to build up. Before it is built up we must expect that the confidence which has been smashed to pieces by the events of last September and by the history of events since 1931 will be very slow to revive. In the interval—I believe the right hon. Gentleman will agree with me—export credits may play a very important part. It is for that reason that I am very glad that this political use of the system has been begun and that the Department of Overseas Trade will have practical experience of the working of the system on a larger scale.
I agree with my hon. Friend the Member for Bassetlaw (Mr. Bellenger) that the building up of this system will raise a considerable problem of Parliamentary control. I do not think the hon. Member for Stretford (Mr. Crossley) adequately answered the point about the prices of the goods to be sold abroad. I will not go into that question, but I think the argument is exactly the other way round. I hope the right hon. Gentleman will tell us how it is intended to deal with the question of the prices to be charged to the foreign Powers who receive these export credit loans. I hope he will tell us that the Government are giving very careful consideration to the question whether for a long period it will not be necessary to have some form of Parliamentary Committee to supervise what is done by the Board of Trade in this most important branch of its work. Subject to that, I say again that I welcome the new principle which this Bill involves, and I hope that it will lead the way to its very useful operation when we face the next big crisis.
The immediate purpose of this political development of the system, as the right hon. Gentleman told us, is to strengthen our system of organised resistance to aggression, and thereby, we hope, to prevent war. To put it more brutally, it is to finance armament purchases by our Allies in the new peace front. There are some people who say—Dr. Goebbels is one, and many people share his view—that this action on our part is nothing but a power politics alliance of the pre-War type. I am bound to confess that the

Government have conducted a good deal of their negotiations since March in such a way as to make the Germans, the Russians, the Americans, the Dutch, the Swiss and the Finns think that this is power politics in a different form. If the peace front were nothing but power politics, if it were nothing but an effort to uphold our Imperialist power, then, in my view, this export credit lending to Allies for armaments would be open to very serious objection. There have been lots of armament loans in the past, and many of them have frequently gone wrong. France lent many hundreds of millions of pounds before the War to certain countries in order that they might buy armaments, and the result was that the French peasants lost money, while in a good many cases the armaments were used against the French themselves. If our peace front were to be made a power politics alliance, we should run a grave risk of the same thing happening to us.
It is only if we make this peace front a system of real collective security, open to all nations who are against aggression, designed to restore stable peace by the re-establishment of the rule of law, that this new departure can be supported. It is because we think the Government are aiming in that direction that we support them on this Bill. We think it is quite consistent with the basic principles of the Covenant of the League to do this. When the Prime Minister announced the introduction of conscription he said that we were not living in the normal times of peace. That is true, and if it is true, then in trying to strengthen our peace front by economic action we are only carrying out the provision of the Covenant of the League, which says:
The members of the League will mutually support one another in the economic measures which are required.
It is in order to give effect to that principle that the British people will agree to the policy which this Bill involves. The clearer, the stronger and the firmer our foreign policy is and the more certain our support for international law, the more likely are we to prevent law and to get back the money which we are going to lend under this Bill.
This Bill is part of our effort to convince Herr Ribbentrop that we are really in earnest. It is part of our effort to show


the aggressors that the peace front is a reality, and that it has resources behind it which they will never be able to equal or overcome. If that be our purpose, then when we start on this course it is vital that we should make Herr Ribbentrop believe that it is real, and we must strengthen the position of our Allies and make provision and take the necessary action to secure that end. I would say, with respect, that I do not think the Government have done very well in that regard. I am not now thinking of the negotiations with Russia, but I am thinking of this Bill. It was on 15th March that Herr Hitler went into Prague and caused the Government to turn a somersault. To-morrow, is the 15th July, so that four months have gone by and it is only to-day that this Bill has been brought before us.
The Government have made a big increase in the amount of money they are asking for. The amount, however, is not so big when one considers the problem that has to be dealt with. Take Poland. Poland is a large country, with 35,000,000 inhabitants, and she has had to keep 1,000,000 men under arms all this year. Will Herr Ribbentrop believe that what Poland is to get under this Bill will give her enough help to make a serious difference to her position? Will Herr Ribbentrop, knowing the credits which his Government are providing for their allies, or in order to gain allies, believe that £5,500,000 will really make a serious difference to the position of Rumania? I hope he will, because it is fundamental to the position we have to face. With these considerations in view, no one can say that the provision in this Bill is unduly large. Indeed, I want to urge the Minister—I know he will need very little urging—that if he needs more money for credits of this kind he will come back to the House and ask for it, explaining that it is necessary to make the policy on which we are now engaged, succeed.
I hope, with other hon. Members, that the Government in pursuing this policy will take into account other means by which the purpose of the Bill can be achieved. Some hon. Members have talked about buying tobacco. I agree with that. I do not believe that the hon. Member who expressed such expert knowledge of cigarettes would be able to detect one or two per cent. of Turkish or Greek tobacco if it was blended into the tobacco

he smokes. But far more important than tobacco is food. What food supplies have we? Five weeks' reserves. We ought to have a year's reserve at least. All over the Balkans there are bumper crops. We could buy food in Hungary, Yugoslavia and Greece—perhaps not so much food from Greece, but we could buy some things that would be of great use to us in time of war and would help to build up the year's reserves that we ought to have. It would also increase our export trade by buying from those countries. It would enormously improve our political position, would perhaps help us to widen and strengthen the peace front, and build up a reserve of real wealth on which, whatever happened, either peace or war, the nation could make no very considerable loss.
I hope that in pursuing the purposes of this Bill the Government will go even beyond the purpose for which it was originally required. They might in some cases make sterling loans, but I admit that a sterling loan would involve difficulties and risks of a new and different kind. That is true, but I put it to him, and I beg the Government to consider, that the major risk is that of war. There is no other risk so great as the risk of war, and if the purpose of this action to prevent war is to succeed then what we gain by preventing war outweighs, and immeasurably outweighs, any risks there are involved in increasing our commitments at the present time. Suppose it does not succeed and war comes, then, obviously, we shall have to give to our allies—and I hope they will be numerous —loans of every kind far beyond anything which it is possible to contemplate to-day. In other words, I think you have to consider whether you can really measure risks—I mean financial and economic risks—by counting up the millions you lend at the present time. It may be that the greater the outlay you make the less the real risk you are taking. Indeed, that is the whole of our philosophy on armaments production, a detestable philosophy, but in the present circumstances inevitable. I put it to the right hon. Gentleman that if the policy of the Bill is sound, it may well be that our economic philosophy ought to be the same as our political philosophy, and that the greater the outlay the less the real risk we shall run. I believe it to be our interest to treat Poland, Rumania and Turkey very


generously under the Bill. I believe it is to our interest, because it may help us to prevent an aggressive war.
I am perfectly certain it is our interest to treat China very generously under the Bill. I do not press the Minister to tell us what he is doing for China, but, like my hon. Friend the Member for Basset-law, I shall be glad to hear, but I would urge upon him that China should be brought within the scope of the Bill and given new credits beyond anything she has had already, and an adequate share of the new money. I would urge that the terms of the contracts which the Board of Trade make with her should be generous, because she is in a different position, indeed, that she should be treated not only fairly but more than fairly in every way. I believe that in no other way under the Bill can we so plainly serve vital British interests. What is the position in the East? Japanese militarists have demanded that she shall be free to establish what they call their new order. We know what the new order means; posters have been put up outside the houses of British residents in Japan, "Britons, clear out of Asia." The Japanese Prime Minister himself has told us that a condition of the success of what we are pleased to call the the negotiations in Tokyo is that we shall cease to help Chiang Kai Shek; in other words, that we shall actively assist Japan to complete her conquest of the Chinese people. The Government have no intention of agreeing to this demand, and neither they nor the French, nor any other Government, mean to abandon the position which they have held so long in the Far East. To accept the Japanese demand would mean nothing less than that. They have told us only this week that they would not abandon their rights in China under international law, or recognise the legitimacy of the Japanese invasion.
If we desire to maintain our rights and our position in the East, if we desire to keep an independent China then, obviously, the Chinese Army fighting today are our allies; they are fighting for us, and if their resistance should collapse, it would be a grievous blow not only to British interests in the Far East but to the whole peace front throughout the world. If that is true, and it is, it is not only our duty but our vital interest to

give China help. Indeed, we should do far more than we can under the Bill to help them. It is sheer lunacy that this country, the Dominions and Colonies and British India, should be taking more than 40 percent. of the exports of Japan today. The "Financial News" told us last week on the front page that according to the best experts in the City of London Japan was very nearly at the end of her gold and foreign exchange. If that is true, then to cut off 40 per cent. of her exports would strike a mortal blow at Japanese aggression. It is sheer lunacy to go on doing what we have since the war began, to furnish Japan with oil and minerals without which her armaments could not be made.

Mr. Deputy-Speaker: I must ask the hon. Member not to pursue the Chinese-Japanese dispute too far, because it does not come under the Bill.

Mr. Noel-Baker: I accept your ruling. I am arguing that if the peace front is to succeed, if the purpose of the Bill is to be fulfilled, we must save China from defeat, and I am urging that there are other means outside the Bill which the Government should adopt. However, I will not pursue the point. I hope the Government will consider these things and that they will treat China very generously under the Bill. If they do so they will help to defeat the new form of financial aggression which the Japanese are trying to carry out. I am certain that in administering this Bill we ought to regard the needs of China, the desparate needs of China, very much as if they were our own. In a real sense they are. Let us remember that money goes a long way in China. Five million pounds there may produce results for us as great as £50,000,000 would produce in Europe. Let us regard China as a vital part of the peace front, and let us think, not of the particular incident at Tientsin but at the great, broad principles for which China is fighting, of which the Government claim their foreign policy is a part. I end by asking the Government, with regard to China and all other countries that in the administration of new powers they are taking to consider that the more they found their action on broad principle the more they make it plain that they are against all aggression, wherever it is; the more they stand for liberty and law, the more likely are they to make the Bill


succeed, the more likely are they to attain the goal they have in view and the more likely they are to avert the tragedy of war.

1.54 p.m.

Mr. R. S. Hudson: I have been asked several specific questions during the course of the Debate, and I will do my best to answer them as shortly as I can. The right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) asked me if I could furnish any estimate of the amount of the £60,000,000 which would be required during the current financial year. I do not think I can do that at the moment, but I think it will be a fair share, say, between 30 and 50 per cent. Several hon. Members have raised the question of Parliamentary control. I am bound to say that I have great sympathy with their difficulties. I should be the last person to try to escape Parliamentary control, but in this matter there are grave problems of defence involved. The hon. Member for Bassetlaw (Mr. Bellenger) asked on whose authority and by whose advice would the Board of Trade allot particular sums. One of the objects of the Bill is to facilitate the purchase by certain countries of material for Defence, and when we are dealing with armaments, in present circumstances, it becomes a question of how to make the best use of the limited means at our disposal. Clearly, this involves taking the advice of the Committee of Imperial Defence and, deciding what to allocate to country A, country B, or country C. I think that if the hon. Member will consider this problem and other similar problems, he will realise that, while we have no desire to escape Parliamentary control, it would not be to the national advantage to give in detail the amounts allotted for particular purposes. Indeed, in Committee it is possible that I may have to ask hon. Members to agree to delete one or two lines in Clause 2 in order to enable us merely to give the total amounts that have been guaranteed every six months to particular countries, without specifying how those amounts are made up. As far as Parliamentary control is possible we will not do anything to limit it, and all the transactions of the Department will eventually come up for review by the Public Accounts Committee.

Mr. Benson: There is one point I should like to put to the right hon.

Gentleman. Under the Export Credits Guarantees Act which was passed earlier this Session, there was a section which stipulated that certain details should be published every six months. Under that Act, we are entitled to a six-monthly statement in about six weeks' time. That part of the Act, however, is being repealed by this Bill, and apparently a new six-monthly period will start as from the passing of this Bill. It is true that the Bill says that the earlier details have to be included, but may I ask that we should have the first statement as from the time when the first Act was passed?

Mr. Hudson: I will look into that matter and see what can be done, but, clearly, a provision that was appropriate when we were dealing only with a very limited problem involving £10,000,000 is no longer appropriate when we are dealing with a much wider problem involving £60,000,000, and when, in addition, this country has undertaken obligations towards certain friendly nations. I want to make it clear that really it would not be in the national interest to go into undue detail.

Mr. Benson: It is merely a question of the date.

Mr. Hudson: I will see whether a statement for the first six months can be issued.

Mr. Noel-Baker: Before the right hon. Gentleman leaves the question of Parliamentary control, does he not consider that it would be laying a very great burden on the Public Accounts Committee if it had all these transactions referred to it? Might it not be better to have a special committee for the purpose?

Mr. Hudson: I understand that the Public Accounts Committee is regarded as being the appropriate body. I think this question had better be left for the moment. As regards the control of prices, obviously in the case of the purchase of armaments the advice and experience of the purchasing side of the Service Departments will be at the disposal of the foreign Governments, and in the case of ordinary purchases, our experience does not lead us to suppose that the representatives of foreign Governments show any desire to pay too high prices. The question of the interest will depend upon the length of the credit


which will be afforded to each country, and therefore, I am afraid I cannot give any estimates in that respect at the present time. As to the meaning of the word "export", if the hon. Member for Bassetlaw who raised the matter will look at Sub-section (2) of Clause 1, he will see that the liability on guarantees in respect or re-exports must come within the limit of £6,000,000. The hon. Member for Chesterfield (Mr. Benson) said that we should experience certain difficulties in getting repayment of these credits. I hope that by the time the credits come to be repaid we shall have got out of the present tendency towards narrow bilateral arrangements and have got back to the older and freer economic system by which payments were made on a triangular, quadrilateral or multilateral basis. We hope that the arrangements for repayments will be such as to avoid any undue loss falling on the taxpayers of this country.
The hon. Member for Derby (Mr. Noel-Baker), in winding up the Debate from the Benches opposite, said that he hoped we were considering means of dealing with the slump that would come when rearmament, or excessive rearmament, came to an end. I agree with him. It is clear that, if we are to avoid very grave unemployment, we shall have to find some means of very large-scale capital development in the more undeveloped parts of the world. These matters are receiving very close consideration. The hon. Member also said that he would like to see our efforts extended to include sterling loans. He said that we must be prepared to take risks of a new and different kind. I assure him that we fully agree with that statement, and that we shall be prepared, when the question arises, to come to Parliament and ask for permission to take risks of a new and different kind. In particular, if we find that sterling loans are required, we shall not hesitate to ask Parliament for the necessary authority. Sterling loans would not come within the terms of this Bill, and if by any chance it were necessary, say in the case of Poland, to give a sterling loan, we should have to ask the House for the necessary powers.

Mr. Noel-Baker: And in the case of China?

Mr. Hudson: As to the case of China, the hon. Member for Stourbridge (Mr. R. Morgan) asked for some details. As he knows, the amounts which were included in Section 4 of the Export Guarantees Act have now been incorporated within the present limit of £60,000,000. Of the original £10,000,000, the portion allotted to China has not yet been absorbed by any means. There are considerable difficulties in the way of coming to an agreement, but I can assure the hon. Member that discussions are taking place, and only yesterday I saw the Chinese Ambassador in connection with the matter.

Mr. Bellenger: Is there any objection to telling us how much has already been given to China by way of guarantee?

Mr. Hudson: There is objection to giving details of commitments on any particular country so far as the ordinary commercial transactions under the original Export Guarantees Act are concerned. I think it is generally agreed that it is undesirable to give information which would enable anyone to identify particular transactions. As far as transactions under the new limit of £60,000,000,are concerned, it is provided in Clause 2 that every six months we shall give such information as we can, showing how much has been guaranteed up to that point. Perhaps the hon. Member for Bassetlaw will be patient for a few weeks until the six-monthly statement becomes due.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House, for Monday next.— [Mr. Buchan-Hepburn.]

Orders of the Day — OVERSEAS TRADE GUARANTEES [MONEY].

Considered in Committee under Standing Order No. 69.

[Colonel CLIFTON BROWN in the Chair.]

Resolved:
That for the purposes of any Act of the present Session to extend the powers of the Board of Trade to give guarantees for the purpose of establishing or encouraging overseas trade; to enable the Board to acquire and dispose of securities guaranteed by them under the said Act or under the Export


Guarantees Act, 1939, and for purposes connected with the matters aforesaid, it is expedient—
A. subject to the limits hereinafter mentioned, to authorise the payment out of moneys provided by Parliament of expenses to be incurred by the Board of Trade under the said Act of the present Session in connection with guarantees given there under for the purposes aforesaid, and to provide that any amount required for fulfilling guarantees so given shall, if not paid out of moneys so provided, be charged on and issued out of the Consolidated Fund.
The limits above referred to are that the aggregate amount of the liability at any time of the Board of Trade in respect of guarantees given under the said Act or under section four of the Export Guarantees Act, 1939 exclusive of any liability in respect of interest on principal moneys so guaranteed shall not exceed sixty million pounds, and, in so far as those guarantees are given in connection with any matter other than the export or an agreement for the export of home-produced goods (including such guarantees as may be treated by virtue of the said Act as such guarantees as aforesaid), shall not exceed six million pounds.
B. to authorise the Treasury to issue from time to time to the Board of Trade out of the Consolidated Fund such sums as may be required to enable the Board to acquire securities (as defined for the purposes of the said Act) guaranteed by them in the exercise of their powers either under the said Act, or under the Export Guarantees Act, 1939;
C. to authorise the Treasury for the purpose of providing money for making issues under the last preceding paragraph, or for replacing sums so issued, to raise money in any manner in which they are authorised to raise money under and for the purposes of subsection (1) of section one of the War Loan Act, 1919; and
D. to make provision for certain conseqential or incidental matters including, in particular, authority to the Board of Trade to pay into the Exchequer such sums as they may be directed by the said Act so to pay, and authority for the issue out of the Exchequer of sums so received into it and their application to the redemption or repayment of debt or, so far as they represent interest, in payment of interest other wise payable out of the permanent annual charge for the National Debt."—(King's Recommendations signified) —[Mr. R. S. Hudson.]

Resolution to be reported upon Monday next.

Orders of the Day — MILK INDUSTRY (No. 2) BILL.

As amended, considered.

SCHEDULE.—(Payments in respect of quality milk.)

2.8 p.m.

Mr. T. Williams: I beg to move, in page 15, to leave out lines 15 to 17.
This Amendment proposes to omit from the Schedule the words:
Milk from an attested herd which is not Accredited, Standard, Tuberculin Tested or Certified Milk.
I hope the Minister will inform the House within what category such milk falls. In Table I of this Schedule premiums are provided on a descending scale from 2¼d. to id. in the case of payments by boards and from1¼d. to ½d. in the case of contributions from the Exchequer. It sets out various grades and qualities of milk produced and consumed in this country. The first paragraph in this Table is:
All Tuberculin Tested or Certified Milk and Milk from an attested herd which is Accredited or Standard Milk.
Milk can be from an attested herd, but it must be accredited milk or standard milk to qualify for the highest rate of premium. Then the second paragraph is:
Accredited or Standard Milk which is not Tuberculin Tested or Certified Milk and is not milk from an attested herd.
That milk acquires the right to premium on the second stage of the scale. The third class of milk is that described in the paragraph which I ask the House to delete, unless we receive a satisfactory reply from the Minister. We are anxious to know if the milk is not accredited, is not standard, is not tuberculin tested, and is not certified, whether it is milk at all or whether it is, as some of my hon. Friends suggested, "just muck." My view is that milk which fails to reach any of those standards must be of a very low grade.

The Minister of Agriculture (Colonel Sir Reginald Dorman-Smith): The Minister of Agriculture (Colonel Sir Reginald Dorman-Smith) indicated dissent.

Mr. Williams: I hope the right hon. and gallant Gentleman will provide us with ample reasons for not voting for the Amendment, but it seems to me that milk which fails to qualify for any one of those four standards, must below-grade milk, in respect of which there should not be any special premium either from the Milk Marketing Board or the Treasury. The fact that the Milk Marketing Board is willing to pay a premium for milk from attested herds indicates that they, at least, feel that the quality does reach a certain standard, although it is not what we call standard milk. I cannot forget that the Milk Marketing Board is composed of


farmers. It represents the producers, and to that extent it is not an impartial body to determine what is right and wrong in certain respects affecting the interests of producers generally. My view of milk qualification is this. If milk reaches a certain standard and fulfils certain well-defined tests, and is regarded as pure, clean and wholesome, and capable of being given in almost any quantity to women or children, then I am not against either the Board or the Treasury encouraging that quality product. But I am altogether against the Treasury providing funds in respect of milk which answers none of the four designations which I have mentioned.
Milk is sold in this country up to the value of approximately £45,000,000, and dairy products generally to a value of £60,000,000. Before a persons is permitted to sell meat or other commodities those commodities must pass certain tests. We have meat inspectors to prevent— where they can discover it—butchers selling diseased meat. I remember visiting a slaughter-house which is run by the Cooperative Society. It is a very clean and efficient establishment, but the Co-operative movement as such has no control there in regard to saying what is or what is not diseased meat. The county borough council employ two of their own inspectors, paid by the ratepayers, to inspect that slaughter-house, and no carcase can leave until it has been thoroughly examined by those inspectors. I saw a diseased carcase which I am certain was unfit for human consumption. It had already been condemned by the inspectors. I am equally certain that had that carcase been killed in a private slaughterhouse, the odds are that the affected parts would have been torn out and the remainder of the carcase sold on the open market.
If it is wrong to sell diseased meat, it is equally wrong to sell diseased milk, or milk which is not clean, or milk which fails to pass certain well-defined tests and it seems rather absurd to pay premiums in respect of milk which does not answer to any of the qualifications which have been specified. It may be that my fears and anxieties are all wrong. It may be that there are five categories of milk, first, the milk which is of high quality, then the milk which is of less than high

quality, then the milk which is of less than less than high quality, and so on, and that all these are entitled to premiums. But when it comes to milk which is of less high quality than any of these, I do not think the Treasury is justified in providing a premium for it.
For these reasons, these doubts and fears about the quality of this particular milk, I think the House ought to listen very carefully to the Minister and let him, if he can, justify a premium being paid for such milk. I repeat that we do not want to hamper the milk producers; we want to give them all the encouragement possible, but not to leave in their minds the idea that we are so anxious to produce milk in this country that we will provide them with a premium for a quality of milk that fails to pass a reasonable test of cleanliness and purity. For these and many other reasons which I could enumerate I have moved the Amendment, and I anticipate a full and clear explanation from the Minister.

2.17 p.m.

Mr. Hopkin: I rise to intervene in this debate because if this Amendment were carried it would affect a very large number of farmers in my Division. I am sorry to have to come up against my hon. Friend the Member for Don Valley (Mr. T. Williams), because I have a very profound respect for his knowledge and his grasp of agriculture; but I know that my hon. Friend will understand me when I say that in the county which I represent we have over 2,000 attested herds and that if the Amendment were passed it would be an act of gross injustice to the farmers who have gone to the expense of having their herds attested. It would be more than that; it would be a very bad breach of faith with them, because they have put their house in order on the firm promise which was made in this House in 1937 that if they did clean up their herds certain results would come to them.
With great respect I say that I think the Amendment has been misconceived. There are two avenues of approach in attacking the problem of clean and pure milk. The first is to clean up the herds of all disease, and the second is to produce clean milk. The Amendment deals with the first of those attempts. The House surely remembers that in 1937


there was introduced the Agriculture Act, under which £750,000 was set aside for the cleaning up of herds. The then Minister, in introducing that Act, said that healthy cattle were the ultimate foundations for healthy and clean milk. The whole purpose of this scheme of attested herds was to eradicate disease from the herds. How does it come about, then, that this bonus is brought into a Milk Bill? It seems to me that the answer is quite simple. The payment of this bonus upon so many gallons of milk is merely the channel by which the farmers are encouraged to clean up their milk. The Government look round and see what machinery there is already by which these payments can properly, quickly and accurately be made. They see that they have in existence the machinery of the Milk Board. So through these monthly payments there is the easiest way, and I submit a perfectly proper way, of paying the additional penny to those farmers who have expended a good deal of capital in cleaning up their herds.
I would remind the House that at first the 1930 scheme went very badly. I shall not weary the House with many figures, but I will give three. In June, 1938, the number of attested herds throughout the country was 1,513, and in the County of Carmarthen, which I represent, there were 453. One year later there were in the whole country 4,454 attested herds of which over 2,000 were in the County which I represent, and in the whole of South Wales there were 2,525 attested herds. Surely these figures show that the farmer is ready and willing to clean up his herds if he is assisted to do so. Is it not quite clear that this scheme of attested herds aims at one thing, and one thing only, and that is to clean up the herds. It is of the greatest importance that we should have in this country one district where all the animals are disease-free, and we in West Wales—I believe the Minister will confirm this statement—are now on the verge of being declared a disease-free area.
If this Amendment were to be passed there would be no inducement for the remainder of the herds which are not attested to become attested, and this valuable asset, which I am sure every hon. Member would support, would be entirely lost. It is important that in one part of the country there should be a reservoir of disease-free animals, not

merely cows, but all animals, and that farmers should be able to come from other parts of England and Wales to buy their stock in West Wales, where, of course, we charge a perfectly reasonable figure for the animals which we sell. If this Amendment were to succeed it would defeat the very purpose that I know lies very close to the heart of my hon. Friend the Member for Don Valley; it would mean a serious set-back to those counties which have taken on this scheme of attested herds. For that reason I hope, and I ask my hon. Friend—

Mr. A. V. Alexander: The Amendment was moved only in order to get information from the Minister. But I would ask my hon. Friend whether the milk from the 2,000 attested herds reaches the other standards of either "accredited" or "standard," and free from inspection on the basis of those categories.

Mr. Hopkin: I am not able to hold myself out as the expert that my right hon. Friend is. I can only give the House my own experience, and that is that when I go down to the countryside to visit the farms where I know they have attested herds, and I apply the one and only test that I know of, namely, drinking the milk—and that is the only test that my hon. Friend too can apply—I find that that milk is in every way perfectly good and wholesome, and that I am none the worse for having drunk it. We send 20,000,000 gallons of milk from Carmarthenshire to London alone, a good part of it to the Co-operative Society, who are very valuable customers.

Mr. Alexander: We do not apply only the test applied by my hon. Friend. We have elaborate tests.

Mr. Hopkin: And so have other people, but I am perfectly certain that the 20,000,000 gallons of milk sent from Carmarthenshire to London is good, clean, wholesome milk, and I have never heard either the Cow & Gate or United Dairies make any kind of grumble at all as regards the quality of milk that comes from my county. I think we can safely say that there is no grumbling, and for that reason, when I hear the kind of language that we have heard, that the milk is mucky milk and so on, I can only say that that is not the experience that I have had in the county which has


produced so much good milk. It is for that reason that I hope my hon. Friend will not press his Amendment. It is of very great importance indeed to those of us who have so many attested herds in our divisions.

Mr. T. Williams: Might I correct my hon. Friend in his observation about mucky milk? We levied no charge against Carmarthen or any other place. What we asked the right hon. Gentleman to do was to explain what attested milk is and why it fails to reach any one of the four specific standards. If the right hon. and gallant Gentleman can satisfy us that attested milk is pure, clean milk, we will consider whether we can withdraw the Amendment, but all that my hon. Friend has said has satisfied nobody that this milk is clean or pure. He told us that on the farms that he visits the cattle are good to look at and the milk not too bad. I do not disagree with either of those statements, but he has not told us why milk from attested herds is neither accredited, standard, tuberculin-tested, or certified.

Mr. Hopkin: If my hon. Friend had followed the argument that I put forward, he would have known that it was that this is the machinery by which the promise made through the 1937 Act is being carried out.

2.29 p.m.

Dr. Haden Guest: There is, unfortunately, no doubt that, taking the country by and large, there is a very large number of cattle infected with tuberculosis, and that tuberculosis does convey to children less robust than my hon. Friend the Member for Carmarthen (Mr. Hopkin)— just a very small number of children—the disease of tuberculosis. There are two ways of dealing with that, and one of them is by making all the cattle in this country free from disease. That is by no means impossible. Though I agree that it is difficult, it is an ideal which ought to be followed. The Amendment is designed to get information on this matter. I should like to ask how quickly this procedure is likely to enable the farmers, whose difficulties I realise very keenly, to free their cattle from disease. I have the greatest possible sympathy with the farmers, and I know very well that they cannot accomplish impossibilities, but it

is of very great importance to the public health to know how soon this procedure will enable them to make their herds disease free. With that, of course, is linked the question of pasteurisation, unfortunately dropped by the Ministry, but I cannot go into that now.
There is a number of varieties of milk, called by different names. Some of them are actually disease free and some of them are not, and one wants to know how long it will be under this procedure before the country arrives at the point of being able to say that this milk threatens the health of no child. I am sure it would not threaten the health of my hon. Friend in any case—I would almost give him a certificate that he could drink tuberculosis milk—but I am rather surprised that a gentleman who belongs to a learned profession, accustomed to weighing evidence, should consider the fact that he does not get tuberculosis from drinking milk as evidence that a baby would not get it. The cases are not parallel. I want to ask the Minister whether he can put some kind of time scale to this process of improving the herds by means of these subsidy payments.

2.32 p.m.

Sir R. Dorman-Smith: I think the House will agree that we are trying to attack this question of clean milk on two fronts—one to get the milk really clean, and the other to eradicate disease. The particular premium that we are discussing to-day comes under the category of disease eradication, and we believe that it is essential to try and build up a reservoir of disease-free cattle so that other farmers can come into a district and buy. I agree with the hon. Member for Don Valley (Mr. T. Williams) that it would probably be more appropriate to have this particular premium working under the Agriculture Acts as a definite disease-eradication measure. I do not think it is at all right even to suggest that because milk actually does not come up to the accredited standard, it is therefore dirty milk. May I give hon. Members one example from experience on my own farm? When we switched over from ordinary farming to dairy farming, we wanted to get an "accredited" licence. Actually the milk was clean enough to come up to the tuberculin-tested standard, but owing to certain things about the farm—there was


a yard which did not please the sanitary inspector—although the milk was absolutely clean, until I had got that yard cleaned up, I could not get my "accredited" licence.
That sort of thing may well be happening with some of these attested herds. It may be that their buildings are not up to the accredited standard, but the milk may still be pure even though the farm buildings do not absolutely suit the local authorities. If their buildings cannot come up to the accredited standard, these people are setting about improving their herds in another way and we should probably have to put it under another head. In my Second Reading speech, in column 1708, I said: that for the future, after the period with which the Bill deals, we are going to separate this type of premium from milk policy and treat disease eradication on its merits. We see the point, but nevertheless it would be very disastrous if we carried this Amendment, because the Milk Marketing Board have already paid out last year and producers have, in fact, taken on quite a lot of liabilities in research for ridding the herds of tuberculosis.

2.36 p.m.

Mr. Alexander: The right hon. Gentleman's explanation is a little more reassuring on the point that has been raised, but it is another illustration of the very patchy and temporary nature of the proposals that are laid before the House from time to time by the Ministry. After all, the Act under which we are putting up this grant or bonus for the eradication of disease is two years old, and under it provision is made for the submission to Parliament of a scheme for disease eradication. It provides that the scheme, if made, shall be laid before Parliament for28 days, so that we get a proper opportunity of considering it. In fact, we are now faced with another piece of temporary legislation to reimburse the farmer who has started on a very genuine endeavour to eradicate bovine tuberculosis. That is very good, but, in fact, what we are doing is to lay down a detailed category under which various types of bonus are paid, and here is one in which you pay for milk from attested herds which fails to reach either the standard of accredited milk or standard milk.
I quite agree that, with very great and constant and almost exhausting care, in

premises which are unsuitable, or in farms in which a water supply is not readily available in sufficient quantities, you can still perhaps produce milk of the clean type which will be required, but there is also the experience of those of us who have to handle large quantities of milk and test it before it is pasteurised, and there are vast supplies of milk which do not reach that standard of cleanliness. We may actually have milk in respect of which the farmer has taken very great care and spent money to get an attested herd and perhaps, not through his own fault but because of the failure of the landlord to do his job, he will actually be eradicating tuberculosis from his herd but still be sending milk to market which will be liable to produce infantile diarrhœa and diphtheria, and we shall be actually paying out public money in respect of a milk supply which will carry disease.
It does not do to talk about diseased milk as only milk infected with the tubercular germ. That is not the last word in the description of diseased milk, because if it is infected with a bacillus which carries either scarlet fever or diphtheria or infantile diarrhoea, it is diseased milk, so that we get in the position of being asked under this Schedule to be voting public money to eradicate one disease, leaving it free to these people to produce other diseases. I do not think that is a satisfactory method of dealing with it. I give the Minister every possible good mark for trying to make a start, but it is only now, in July, 1939, that we get this position of a bonus being put into the Milk Bill to take the place of a full scheme for the elimination of bovine tuberculosis, which is overdue, under Section 20 (3) of the Act of 1937.

Sir R. Dorman-Smith: There has been one scheme.

Mr. Alexander: That may be, but it apparently has not delivered the goods.

Sir R. Dorman-Smith: It was with the idea of accelerating progress that this premium was given. This was merely a means of dealing with one facet of the problem.

Mr. Alexander: I am still in a little bit of a fog as to the method of procedure that has been adopted. I do not think it is right to be voting public money for


any milk which is not safe and I think that is the test that the medical profession puts to it. Their first and immediate concern for their everyday patients, for nursing mothers and infants, is that the milk that they get should be safe. To be making a grant of money for milk which continues in some respects be in danger of being unsafe seems to me a doubtful sort of policy. The accredited basis is essential if you are to have safe milk, and you would have done far better to make what grants are necessary to an owner of an individual herd for the capital expenditure required for elimination of the unfit and for getting attestation, giving him a bonus on top of that for accredited milk. This seems a very curious method of procedure altogether.

Amendment negatived.

2.45 p.m.

Sir R. Dorman-Smith: I beg to move, "That the Bill be now read the Third time."
During the discussion of this Bill we have seen that, both from the point of view of the milk industry itself and of the interests of the nation at large, we have to bring about an increase in the consumption of milk. In this Bill we have tried to encourage practical steps towards that end. We have tried to show how we are moving along the lines of the eradication of disease and the inducing of cleanliness. There has been a lot of discussion regarding the types of milk which have received the premiums, and we have heard the opinion of the right hon. Member for Hillsborough (Mr. Alexander) on that, but surely the situation is this, that before the milk scheme came in, farmers had not very much encouragement to improve their milk supply. The right hon. Gentleman can remember some of the prices which were paid before the milk scheme came in and they were not an encouragement to milk producers to set about this job. We are a long way from that position now. There has been very substantial improvement as regards both cleanliness and the eradication of disease, and we want to press on along those lines as quickly as possible. It is true that the process will be gradual. I cannot give a definite answer to the request of the hon. Member for North Islington (Dr. Guest) to know when we

are to have completely clean milk in this country.

Dr. Guest: Can the right hon. and gallant Gentleman give an estimate?

Sir R. Dorman-Smith: No, Sir, and it is impossible to do that, as the hon. Member will be well aware. All we can say is that we shall press ahead as hard as we can on both fronts until we do finally reach our ideal. During my Second Reading speech I held out a hope that I might be able to say something about the cheap milk scheme before this Bill left the House and I am now able to give some information about it. I am informed that the Milk Marketing Board are now ready to submit a scheme to me at an early date. The Government have reviewed very carefully the question of the loss likely to be incurred by the Board in the operation of such a scheme for cheap milk, and have reached the conclusion that it would be reasonable to make available an Exchequer grant for the period up to September, 1940, at a rate sufficient to ensure to the Board a return of Is. 2d. per gallon on the average over the year. This figure has been arrived at on the basis of the experience gained from the Special Areas schemes. The rate will vary from month to month, as it does in the milk-in-schools scheme and the experimental Special Areas scheme, in accordance with the seasonal variations in the regional prices of milk. During the period up to the end of September, 1940, the question of the rate of the Exchequer grant for the future will be reviewed in the light of the experience gained during this next period.
The actual scheme has not yet been submitted to me officially, but I think I can safely say that its main features will be broadly similar to those of the scheme in Scotland. The milk will be made available to local authorities in connection with their maternity and child welfare arrangements at the reduced price of 2d. a pint, Is. 4d. a gallon, which is not much more than half the ordinary price. The intention is to enable local authorities to extend their maternity and child welfare schemes. As far as the distributive margin is concerned, that will be not more than 8d. a gallon. I realise that this is considerably less than the margin at present in force.

Mr. Tinker: Where this cheaper milk is given to the children will the Government bear the cost or will the local authorities have to meet it?

Sir R. Dorman-Smith: I am coming to that. With regard to the distributive margin I want to make it clear that no distributor will be forced to come into this scheme, but I do hope that we can look for the co-operation of the distributors in this matter, which is one of very great national importance, and will also, I think, be one of importance to distributors in so much as it will enable them to sell more milk and probably decrease their overheads. The local authorities will authorise individual consumers, that is to say, the mothers and children, to participate in the scheme and will be able to authorise either a supply of milk free to the consumer, or for part payment, or on full payment of the reduced charge of 2d. per pint—according to the scheme which is submitted by the local authority. The balance of the cost of milk supplied at less than 2d. will, as at the present moment, fall on the local authorities own funds. The Exchequer contribution is to enable them to sell at 2d. a pint.
The extent to which this scheme will be used will depend in the first instance on the initiative of the local authorities themselves. Each authority which wishes to participate in the scheme will have to prepare its proposals and submit them for the approval of the Ministry of Health, which will act as the co-ordinator of these schemes. Success will also depend on the response made by the mothers and children themselves. It is the main objective of these schemes to increase consumption by those who to-day consume far too little milk. There will be no limit to the amount of the grant that can be made by the Treasury; the only limit will be the quantity of milk which we can get down the throats of the mothers and the children. I hope that now that we are in sight of a scheme we shall get the hearty co-operation of all concerned in making it successful.
During the Committee stage the right hon. Member for Hillsborough asked a question about the consumers' committee, inquiring whether they would be able to call evidence from those who might be affected. It is not proposed to impose upon the consumers' committee the duty

of giving a decision in the capacity of an arbitrator. If that were proposed, of course they would have to take all the evidence which would be necessary. It is only proposed that a Milk Marketing Board or a Milk Products Marketing Board shall be bound to give the appropriate consumers' committee an opportunity of making representations before the Board fixes the prices or the terms of sale, and that the Board shall consider any representations so made before they come to their decision; and, of course, it will be open to the consumers' committee to make representations to the Minister also before the final decision.

Mr. Alexander: It is a little disturbing to hear that view expressed by the Minister. I understand that they have not to give an arbitrator's decision, but if they are going to make recommendations surely they ought to hear all the evidence of those interested.

Sir R. Dorman-Smith: I do not limit their activities; how they are to arrive at their conclusions is for them to decide, but they are not limited. If they want to take the advice of outside people they are not prevented from doing so. I should like to add that I have been most interested in this Debate, which is the first one on milk in which I have taken part in this capacity. I have taken full note of all that has been said from both sides of the House, and I think that probably all those concerned in the country will equally take note of what has been said. We all know that the only way in which the milk industry can be established on a really firm basis is by establishing increased confidence in the quality and purity of the milk and by an increase in the consumption of milk in liquid form, and I commend this Bill as a further step towards that end.

2.54 p.m.

Mr. T. Williams: I am not sure how many Milk Bills we have had since 1934, but we have had temporary Bills and all kinds of Measures, and I would point out that the one commodity dealt with in any Bill on which there has been no fractious opposition from these benches has been milk. On various occasions, as now, we have found reasons for complaining that the Government were not moving as boldly in certain directions as we think they might There has been no hostility


or opposition from hon. Members sitting on these benches to the encouragement of high grade milk or even to the provision of free milk from Treasury funds. We have always recognised that two things which are essential are a clean and safe milk supply and—which automatically follows from the first—the maximum consumption of liquid milk. We have recognised from the first that Clauses 1 and 2 do something in both those directions. Unless and until we can devise ways and means within our awful economic system, whereby millions of people who have very modest incomes and varying sizes of family are enabled to purchase their proper requirement of liquid milk, the State has to step in and fill the breach. In a thousand and one other ways, such as by means of our health services, the State has had to step in where employers have failed to provide proper wages. Otherwise we should not be as healthy and as happy a nation as we are.
Therefore, under Clause 2 of the Bill, it is quite proper that Parliament should step in and fill the breach by further extending the schemes for the provision of a cheaper supply of milk for children who are attending elementary schools, for expectant and nursing mothers and for children between the ages of one and five years, where the incomes of the homes are so small that the people cannot pay the normal price for the quantities of milk that they require. We have no complaint with regard to Clause 2. Indeed, I am delighted to hear the right hon. Gentleman declare that some measure of agreement has been reached and that a scheme will be promulgated in England and Wales very shortly on the lines of the Scottish scheme which, I believe, started in March in some four or five localities. I have a copy of the circular issued by the Scottish Board of Health notifying the local authorities in Scotland of the facility afforded by the Treasury and encouraging them to adopt the price scheme at the earliest possible moment. Judging from what the right hon. Gentleman has said, England and Wales are to follow very largely on the Scottish lines. We are already three or four months behind Scotland. The English scheme has been held up, whether by the Milk Marketing Board, the Treasury or the distributors;

but now they have almost reached a conclusion and I hope that the Minister of Health, being a Scotsman and an ex-Minister of Agriculture—he started this milk scheme in 1934—will work at top speed to get all the local authorities in the country to adopt the scheme.
From that point of view, whatever cost may fall upon the Treasury in providing and extending liquid milk consumption, we shall glory in that expenditure and whatever the local authorities do in extending their scheme again we shall glory in that. We would ten thousand times rather subsidise the consumption of liquid milk than subsidise the sending of milk for manufacture. We want to see the consumption of milk increase year by year and the quantity given to the factories decreased year by year until the Milk Marketing Board, in association with the milk producers, can find the happy medium, and arrange that the distribution of milk between the factory and the liquid consumer is well balanced. We shall then be much happier than we are at the moment.
I do not intend to say a word about Clauses 3 to 5. Clause 7 deals with the consumers' committee I hope that this committee will be able to influence the Milk Marketing Board and the distributors of this country. Let the distributors say what they will, they are looking after their own interests from beginning to end. In the Agricultural Marketing Act of 1933, a consumers' committee was set up to have an oversight of that marketing scheme. The Bill extends the power of the consumers' committee and forces the Milk Marketing Board to notify the committee when next year's contracts are about to be entered into. The Board must listen to representations made. Assuming that the consumers' committee is elected and that it thoroughly and meticulously examines the Report of the Cutforth Committee which examined faithfully the question of distribution and charges, will the consumers' committee, having acquired all that knowledge of the extravagance, wastefulness and inefficiency of the distribution system, be able to use that knowledge upon the councils of the other two bodies when the next contract period comes along, and when making observations to the Milk Marketing Board and the distributors?
The consumer's committee are invited to make observations on prices over the


next 12-monthly period. Their observations must be based upon some conclusions, drawn from the analysis of some accumulated knowledge of facts. I wonder whether such a committee will be able to represent to the Milk Marketing Board and to the distributors' organisations that the committee have discovered weaknesses either in the productive machinery or the distributive machine, and that in future prices ought to have some relation to efficiency on one side or the other. That would make the committee's function real and worth while. I do not like to see in a Bill, Clauses that are mere verbiage and meaningless. I should prefer that Clause 7 had some reality. I hope that the committee will, on making representations, be able to call the attention of the Milk Marketing Board to inefficient producers of milk who are acting as a drag upon the multitude of producers, and to inefficient distributors when 20 retailers are operating in one street. I hope the committee will be able to bring those facts to the notice of those two bodies.
We welcome the general object of the Bill. We hope that farmers will see the wisdom of taking advantage of these provisions to clean up their herds and to purify their milk. We hope that local authorities will take the maximum advantages of the facilities afforded to them to supply milk to expectant mothers and young children much more cheaply than these people have been able to get it before. With regard to the consumers' committee I have already made some observations. I hope they will become a really effective body, and that the Bill will be one more stage in the direction of purifying our herds and extending the consumption of milk in this country.

3.5 p.m.

Brigadier-General Clifton Brown: I hope that the Bill will be worked to the fullest possible extent, and will give that confidence which was promised a year ago to those of us who produce quality milk. I feel sure that the Milk Marketing Board and others concerned will return that confidence by doing their best to increase the production of good quality milk and to assist in the cleaning up of herds. I am glad to welcome the arrangement with regard to the figure of Is. 2d. in connection with Clause 2, which will give the producer a fair chance to go on.
As regards the question of attested herds, I agree that our first job should really have been to get our herds accredited and to get our buildings into the necessary state of repair, and then to go in for attesting. That is what I have been inclined to do myself, but it was perhaps owing to my ignorance; I thought I had to do that before I could get a herd attested. This costs money. It has cost me a great deal to improve my own buildings, and as my tenants are all trying to get attested as well, it has cost me and them a good deal to get the buildings and the water. I have now got one herd attested, but the other is not yet attested, and I have the expense of pensioning them off and so on. I hope to get that herd attested later.
Like the hon. Member for Carmarthen (Mr. Hopkin), I want to know where I can provide myself with disease-free cattle. I may not buy from any herd that is not free from disease. Useful work is being done in providing disease-free cattle for the purposes of attested herds, but you have to go either to North Wales or to Ayr, in both of which districts a great deal of attention has been given to the herds and to getting districts and areas free from disease, though they have not perhaps cleaned up their milk. It is useful to accredited producers who are trying to get their herds attested to be able to buy cattle which they can get attested as well as accredited. I am glad that the Opposition are supporting the objects of the Bill. Like everyone else, I hope and feel sure that those who are doing their best to clean up their herds with the aid of these various subsidies for accredited milk, tuberculin-tested milk, and so forth, will now have a fresh chance of getting herds from large districts which are free from disease and which will afterwards produce cleaner milk.

3.9 p.m.

Mr. Brooke: This is the first time that the House has had the opportunity to give the Third Reading to a Milk Bill which makes specific mention of the supply of cheap milk to expectant and nursing mothers and young children under school age. Personally, I am very glad and very proud that this should be in a Bill introduced by a Conservative Minister in a National Government. The scheme which my right hon. and gallant Friend has outlined to us this afternoon is to be


worked through local authorities. I am a member of a local authority which is a very progressive one. But not all local authorities are progressive, and at this time all local authorities have overshadowing them the work of air-raid precautions, and definite advice from the responsible Minister to give precedence to Civil Defence work. I hope that my right hon. Friend, in conjunction with the Minister of Health, will take care that local authorities do not neglect their opportunities to make use of this scheme for the provision of cheap milk, but that they will regard it rather as a Civil Defence service of the finest sort.
I have listened to the Debates on this Bill, and there is one question, and I think it is a fundamental one, which remains unsettled in my mind. Is the principle to be accepted that farmers must have a remunerative price for all the milk they produce, regardless of the amount that is disposable in the liquid market? We know that we must have a 20 per cent. surplus over liquid requirements, taking the year as a whole, to ensure that there is no shortage in November and December, and, as my right hon. Friend pointed out the other day, a further surplus to ensure that the manufacturing industry does not run dry at any time of the year. But for the last three years we have had a surplus not of 20 per cent. but 40 or 45 per cent. We have been producing some 300,000,000 gallons per year over and above liquid requirements—300,000,000 gallons, which have cost £12,000,000 to produce and have realised £8,000,000 in the market. That difference of £4,000,000 has had to be made up by the consumer. To me, it sounds only too much like what I should expect to find if all the industries of this country were socialised; but I will not follow up that point. It seems to me that this Bill gives a partial answer to the problem, but not the whole answer. The object should be to encourage, by all the means in our power, the production of quality milk, but not to encourage other milk—in other words, to give more and more advantage to the farmer who takes care and trouble to see that his milk is fit for drinking, at the expense of the farmer who does not. We should increase the accredited premium more and more, and make the non-accredited producer pay for it. My

one fear is that, with the Milk Marketing Board responsible to producers four-fifths of whom are non-accredited, we may have to wait a long time before the necessity for that policy is recognised. The Milk Marketing Board, as a. marketing organisation, has achieved tremendous success. Everyone recognises its efficiency in that line. But a body of such a kind, established under Parliamentary authority, has a great social responsibility also; and the Board will not be a success in the eyes of nine-tenths of our population until the retail price of liquid milk begins to fall. There is apt to be a spirit of conflict engendered by the monopoly powers of a producers' board, whether the board misuses those powers or not. I hope that my right hon. Friend when passing on from this Bill, excellent in many respects as far as it goes, to consider his final milk policy, will put out of his mind any idea of a wholly independent milk commission, but will give very close study to the possibilities in the kind of organisation which this House approved only the other day for the Lancashire cotton industry.

3.16 p.m.

Dr. Guest: I am afraid that I did not follow the hon. Member for West Lewisham (Mr. Brooke) in his last remark with regard to the Milk Commission. It is very lamentable indeed that that particular suggestion has gone by the board. There should have, been provision for the constitution of a commission not only to look after the details of management, and so on, but also to deal with the important question of research. It is essential that such a Commission should at some time or other be revived, and I would remind the hon. Member and others that previous commissions in one form or another strongly recommended something on the lines of what appeared in the now defunct Bill relating to the Milk Commission.
With regard to A.R.P. and nutrition, it is obvious that the first necessity of Civil Defence is food. Any Government who do not look after food properly are going to be beaten before they start. But the Government have made it clear that they are extremely anxious that food should be in good supply, and that private individuals should have stores of it, but it is all the more necessary that


we should be certain that the milk supply is adequate. I was very glad indeed to hear the Minister say that the cheap milk scheme for expectant and nursing mothers, and for children under five, is shortly to come into operation. I was also very glad to hear the way in which he referred to that, but I would remind him that a somewhat similar speech was made in 1938 when the Milk (Amendment) Act was passed, and that up to the present moment not one penny of the £250,000 then made available has been spent.
I understand that final arrangements with the distributors have not yet been made. I only hope that they will be made, and that the distributors themselves will realise that, in distributing milk in connection with cheap milk schemes, they are performing a social service of the greatest possible value. They should be ready not to make a loss, but to do it at cost price. This is a matter in which the farmers, the distributors and the consumers all have a common interest. The best thing that can possibly happen is that what has frequently been referred to as the marriage of health and agriculture should actually take place. The supply of milk in the country should be greatly increased, and the producers should be able, in consequence, to reduce prices to distributors because of handling a much larger quantity, and the price of milk should be reduced to the community so that they could buy a very greatly increased quantity up to an average of a pint a day per head. It is essential that quantities should be increased and that prices should be reduced.
It was unfortunate that the right hon. and gallant Gentleman was not able to point to a time scale envisaging the eradication of tuberculosis from herds of dairy cattle. I realise that it is a difficult thing to do; but I was hoping that he would have been advised of some period of time within which it might be reasonable to expect that that disease would be eradicated. I would remind him, as my hon. Friend said, that there is not only the question of conveyance of that disease, but there is infection in regard to scarlet fever, typhoid, etc., if the milk is improperly handled, and not clean. For all these reasons, because the Minister is not able to put a period to the time when

tuberculosis will be eradicated, and because it is impossible to expect that all milk in the next five or 10 years will come up to a standard when it can really be described as clean and free from the possibility of conveying disease to those who take it, pasteurisation is essential. I think it will be essential to have a pasteurisation Measure brought in, so that the community, who are paying very considerable amounts towards these premiums for milk service in general, will get value for it and be protected against the very serious danger of disease. It is not only a question of the actual protection against disease, but the actual money spent on diseases of this kind which cost the community a great deal, not only in money but in lives.
I am not, of course, speaking for the medical profession, but I am speaking as a doctor who has for the most part of his life dealt specially with school children and small children. I have always been a convinced advocate, from a very long time before it was fashionable to advocate it, of the value and importance of milk; but I have always been held back by not being quite sure that the milk which I was going to recommend would be safe for the children. That applied in the past more than at the present time, but it always was a difficulty that if one did recommend that children should take milk, and particularly if one was responsible at a clinic for providing milk, one had to be very careful that the milk in question was healthy to drink. I am speaking from my individual experience. The same consideration applies to every doctor. There are many thousands of doctors, and every doctor is convinced of the value as a food. Every doctor will become an enthusiastic propagandist in the "Drink More Milk" campaign as soon as the medical profession are assured that they can do that with complete safety. Therefore, in every effort the Government make to improve the safety of milk they will more and more get the co-operation of the medical profession. There is one thing that could make the profession 100 per cent. wholehearted in that direction in the immediate future, and that would be if the Minister would introduce a short one Clause Measure to ensure that the milk required is pasteurised before it is issued for human consumption.

3.24 p.m.

Mr. Alexander: It is well to point out that the Minister has made a very important statement as to Clause 2. I am sure the fact that he has arrived at such an agreement with the Milk Marketing Board will be welcomed generally, but he did not give us any information as to whether any agreement had been reached with the people who will distribute the milk, as to the margin. He mentioned a margin of 8d. a gallon.

Sir R. Dorman-Smith: Not more.

Mr. Alexander: Not more than 8d; it may be less. This brings my recollection back to the struggles there have been about this question of margin in connection with cheap milk schemes, and how the school scheme had to be rescued in its inception.
I know what the experience has been in the last few years with regard to the schools milk scheme. I think it is essential that the co-operation of all interests should be secured, and I welcome the Minister's statement this afternoon. When he says that the Government are prepared to give an extended Government grant without limit in this respect I hope he will consider the general economic result. We all want cheap milk and a wider consumption of milk, but we must keep in mind the economic effect upon the scheme governing the industry as a whole. If there is to be an unlimited expenditure of subsidy on cheap milk, and a differentially low price under contract to the producer while the liquid milk is being sold on contract at a higher price, you might get a huge volume of milk passing over from the present profitable basis and sold on an unprofitable basis, and you would have to consider how far the Government subsidy would require to be constantly expanded.
I am not at all sure, from the manner in which the Minister made his announcement, whether that side has been taken into account. Certainly the Milk Marketing Board's side in the case of milk sold for manufacture has been taken into account, for they are to be guaranteed a price of Is. 2d., while the milk sold for the purposes of the manufacturing milk market may be as low as 5½d. and 7d. If one wants to get the full and free cooperation of all interests you must put

before them the figures, what you estimate. I admit that the Minister cannot do it entirely by himself; he has to take account of the manner in which the Ministry of Health approaches the scheme and the extent to which local authorities adopt the scheme, but there must be taken into account how much liquid milk will be taken out of the market and get the subsidy in the cheap milk market. I beg the Minister to look at the experience of the milk marketing scheme in the Rhondda Valley, and get some idea of what will be the consumption per head of the population in the ordinary free market and in the subsidised milk market, so that we shall get some idea of what is to be the return between the two. When this comes on a wider basis it may be of considerable importance for the future of the milk scheme as a whole.
There is another point to which I want to refer in connection with this Bill, which is another temporary advance on the larger agricultural policy which lies behind. It is with great regret that we cannot include in our blessing this afternoon praise for the giving, as soon as may be, of safe milk to the community. My hon. Friend the Member for North Islington (Dr. Guest) was very generous to the Minister when he referred to five years or 10 years as being the period in which the whole of the milk supply might be cleaned up. At the present rate, the period is likely to be much longer than that. That contention is supported by the fact that the Government have eliminated pasteurisation from their proposals, and in the discussions on the Bill it has been laid down that no general Bill to deal with that matter is to be introduced either by the Minister of Agriculture or the Minister of Health, but that it is to be left to the separate local authorities to seek separate and special powers in each case, and then only under certain conditions which will lay fairly heavy burdens upon the local rating authorities. It is a serious prospect to people such as my hon. Friend the Member for North Islington, Lord Dawson of Penn, and other authorities, that the matter should be left in that position. The fact that we shall not vote against the Bill—for what is in it ought to help, and we cannot vote against it because of what is not in it—does not mean that the Government ought to be


satisfied. They ought to consider the matter afresh and examine urgently the question of the provision of a safe milk supply for the whole population. For that reason, there ought to be, as soon as may be, powers of compulsory pasteurisation available for the whole country.

Question, "That the Bill be now read the Third time," put, and agreed to.

Bill read the Third time, and passed.

The remaining Orders were read, and postponed.

Orders of the Day — ADJOURNMENT.

Resolved,

"That this House do now adjourn."—[Captain Dugdale.]

Adjourned accordingly at Twenty-Eight Minutes before Four o'Clock, until Monday next, 17th July.